You are cordially invited to attend a special meeting of stockholders of Condor Hospitality Trust, Inc. (the “Company”) to be held on November 12, 2021 at 11:00 a.m. Eastern time. The special meeting will be held in virtual-only format via live webcast at www.virtualshareholdermeeting.com/CDOR2021SM2 (there is no physical location for the special meeting). You will need to have your control number that is included on your proxy card.

The board of directors of the Company (the “Board”) has called the special meeting in order to seek your approval of, among other things, the sale of the Company’s 15 hotels and other assets (the “Portfolio Sale”) and the dissolution and liquidation of the Company in accordance with the Company’s Plan of Liquidation and Dissolution (the “Plan of Liquidation”). The principal purpose of the Portfolio Sale and the Plan of Liquidation is to provide liquidity to our stockholders by selling the Company’s assets, paying its debts and distributing the net proceeds from liquidation to our stockholders.

In connection with a review of potential strategic alternatives available to the Company, as well as management’s estimate of the range of liquidating distributions per share to be received by our stockholders in a planned liquidation pursuant to the Plan of Liquidation following the completion of the Portfolio Sale, the Board has determined that it is advisable and in the best interests of the Company and its stockholders to sell all or substantially all of the Company’s properties and assets and liquidate and dissolve the Company pursuant to the Portfolio Sale and the Plan of Liquidation. The Board also has determined that the terms and conditions of the Portfolio Sale and the Plan of Liquidation are fair to you, advisable and in your best interest and has unanimously approved the sale of all or substantially all of the Company’s assets and the dissolution of the Company pursuant to the Portfolio Sale and the Plan of Liquidation. Accordingly, the Board unanimously recommends that you vote “FOR” the approval of the Portfolio Sale and “FOR” the approval of the dissolution and liquidation of the Company in accordance with the Plan of Liquidation.

We presently estimate that if the Portfolio Sale and the dissolution and liquidation of the Company in accordance with the Plan of Liquidation are approved by our stockholders and we are able to successfully implement the Portfolio Sale and Plan of Liquidation, then after the sale of all or substantially all of the Company’s assets and the payment of all of the Company’s outstanding liabilities, the Company will distribute proceeds to our stockholders of approximately $7.35 to $7.85 per share of the Company’s common stock, less applicable withholding tax, as estimated by the Company as of September 20, 2021. Although we have provided an estimated range of liquidating distributions, we cannot determine at this time when, or potentially whether, we will be able to make any liquidating distributions to our stockholders or the amount of any such distributions. See “Risk Factors—Risks Related to the Plan of Liquidation” in the enclosed proxy statement.

At the meeting, you will be asked to:

The Board has unanimously approved each of the proposals and recommends that you vote “FOR” each of the proposals described in the accompanying proxy statement.

In view of potential adverse issues arising from the public health impact of Coronavirus-19, the special meeting will be held in virtual-only format via live audio webcast online. Stockholders will not be able to attend the special meeting in person at a physical location.

Your vote is very important. Whether or not you plan to attend the special meeting, we urge you to authorize a proxy vote to vote your shares promptly. You may authorize a proxy to vote your shares via a toll-free telephone number, by internet or by completing, signing, dating and mailing the proxy card in the enclosed envelope, whether or not you plan to attend the special meeting via webcast. Any stockholder giving a proxy may revoke it before the special meeting whether delivered by telephone, internet or through the mail, by using the telephone voting procedures, the internet voting procedures or by mailing a signed instrument revoking the proxy to: Corporate Secretary, Condor Hospitality Trust, Inc., 1800 W. Pasewalk Avenue, Suite 120, Norfolk, NE 68701. To be effective, a mailed revocation must be received by the Secretary before the date of the special meeting and a telephonic or internet revocation must be submitted by 11:59 p.m. Eastern Time on November 11, 2021. A stockholder may virtually attend the special meeting in person and at that time withdraw the proxy and vote in person. If you hold your shares in “street name,” you should instruct your broker how to vote in accordance with your voting instruction card.

Thank you for your cooperation and continued support.

You are cordially invited to attend a special meeting of stockholders of Condor Hospitality Trust, Inc. (the “Company”) to be held on November 12, 2021 at 11:00 a.m. Eastern time. The special meeting will be held in virtual-only format via live webcast at www.virtualshareholdermeeting.com/CDOR2021SM2 (there is no physical location for the Special Meeting). You will need to have your control number that is included on your proxy card.

The board of directors of the Company (the “Board”) has called the special meeting in order to seek your approval of, among other things, the sale of the Company’s hotels and other assets (the “Portfolio Sale”) and the dissolution and liquidation of the Company in accordance with the Company’s Plan of Liquidation and Dissolution (the “Plan of Liquidation”). The principal purpose of the Portfolio Sale and the Plan of Liquidation is to provide liquidity to our stockholders by selling the Company’s assets, paying its debts and distributing the net proceeds from liquidation to our stockholders.

At the meeting, you will be asked to:

The Board has unanimously approved each of the proposals and recommends that you vote “FOR” the Portfolio Sale Proposal, “FOR” the Liquidation Proposal, “FOR” the Advisory Compensation Proposal, and “FOR” the Adjournment Proposal. Information about each of the proposals is included in the accompanying proxy statement. We urge you to read this material carefully. Copies of the Purchase Agreement and Plan of Liquidation are attached as Appendix A and Appendix B respectively to the proxy statement.

The Board has fixed the close of business on October 13, 2021 as the record date for the determination of stockholders entitled to notice of and to vote at the meeting or any postponement or adjournment thereof. Only holders of record of shares of the Company’s common stock, par value $0.01 per share (“Company common stock”), at the close of business on October 13, 2021 will be entitled to notice of and to vote at the special meeting or any postponements or adjournments of the special meeting.

Approval of the Portfolio Sale Proposal requires the affirmative vote of a majority of the votes entitled to be cast by the holders of the Company common stock. Abstentions and broker non-votes will have the same effect as a vote against the Portfolio Sale Proposal.

Approval of the Liquidation Proposal requires the affirmative vote of a majority of the votes entitled to be cast by the holders of the Company common stock. Abstentions and broker non-votes will have the same effect as a vote against the Liquidation Proposal.

Approval of the Advisory Compensation Proposal and the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by the holders of the Company common stock present in person or represented by proxy at the special meeting and entitled to vote on each of these matters. Abstentions and broker non-votes will have no impact on the vote on these matters.

In view of potential adverse issues arising from the public health impact of Coronavirus-19, the special meeting will be held in virtual-only format via live audio webcast online. Stockholders will not be able to attend the special meeting in person at a physical location.

Whether or not you plan to attend the special meeting, we urge you to authorize a proxy to vote your shares promptly. You may authorize a proxy to vote your shares via a toll-free telephone number, by internet or by completing, signing, dating and mailing the proxy card in the enclosed envelope, whether or not you plan to attend the special meeting via webcast. Any stockholder giving a proxy may revoke it before the special meeting whether delivered by telephone, internet or through the mail, by using the telephone voting procedures, the internet voting procedures or by mailing a signed instrument revoking the proxy to: Corporate Secretary, Condor Hospitality Trust, Inc., 1800 W. Pasewalk Avenue, Suite 120, Norfolk, NE 68701. To be effective, a mailed revocation must be received by the Secretary before the date of the special meeting and a telephonic or internet revocation must be submitted by 11:59 p.m. Eastern Time on November 11, 2021. A stockholder may virtually attend the special meeting and at that time withdraw the proxy and vote in person. If you hold your shares in “street name,” you should instruct your broker how to vote in accordance with your voting instruction card.

We encourage you to read the accompanying proxy statement in its entirety and to submit a proxy or voting instructions so that your shares will be represented and voted even if you do not attend the special meeting. If you have questions about these proposals or would like additional copies of the proxy statement, please contact: Condor Hospitality Trust, Inc., Attention: Corporate Secretary; telephone: 301-861-3305.

You are cordially invited to virtually attend the special meeting. Your vote is very important.

The special meeting of stockholders will be held on November 12, 2021, at 11:00 a.m., Eastern time. The special meeting will be held in virtual-only format via live webcast at www.virtualshareholdermeeting.com/CDOR2021SM2 (there is no physical location for the special meeting). You will need to have your control number that is included on your proxy card.

The purpose of the special meeting is to consider and vote on the following proposals:

Portfolio Sale Proposal (Proposal One). Our board of directors has determined that it is advisable and in the best interest of the Company and our stockholders to sell the Company’s hotels and other assets pursuant to the Purchase Agreement to the Buyer. Stockholder approval is required to complete the Portfolio Sale.

Liquidation Proposal (Proposal Two). Our board of directors has determined that it is advisable and in the best interests of the Company and our stockholders to sell all or substantially all of our assets, pay off our outstanding liabilities, distribute the net proceeds to our stockholders and dissolve. To do so, our board of directors has adopted the Plan of Liquidation. Stockholder approval of the dissolution and liquidation of the Company is required to complete the Plan of Liquidation.

The Advisory Compensation Proposal (Proposal Three). You will be asked to consider and vote upon the proposal to approve, on a non-binding, advisory basis, the specified compensation that may be paid or become payable to our named executive officers in connection with the Portfolio Sale and the Plan of Liquidation.

The Adjournment Proposal (Proposal Four). You will be asked to consider and vote upon the proposal to approve one or more adjournments of the special meeting to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Portfolio Sale Proposal or the Liquidation Proposal. Stockholder approval is required to adopt the Adjournment Proposal.

The Board does not know of any matters that may be acted upon at the meeting other than the matters set forth in the proposals listed above and, pursuant to our bylaws, only the matters set forth in this notice of special meeting may be brought before the special meeting.

Pursuant to the Purchase Agreement, the Company will sell its subsidiaries that own its 15 hotels to the Buyer for $305,000,000. The Portfolio Sale will constitute a sale of all or substantially all of our assets.

The Plan of Liquidation contemplates the orderly sale of our assets and the payment of or provision for our outstanding liabilities and expenses, which may include establishing a reserve fund or transferring assets to a liquidating trust to pay contingent liabilities and ongoing expenses in an amount to be determined as information concerning such contingencies and expenses becomes available. The principal purpose of the liquidation is to seek to provide liquidity to our stockholders by liquidating our assets and distributing the net proceeds of the liquidation to the holders of our common stock. See “Proposal Two: Liquidation Proposal— Implementation of the Plan of Liquidation and Portfolio Sales” on page 73. We believe the Portfolio Sale best ensures that the sale of our assets occurs in a manner designed to enhance the consideration received for such assets.

At such time as the Company has sold its assets, satisfied its liabilities and distributed the net proceeds of asset sales to our stockholders, we will file Articles of Dissolution with the SDAT, and the Company will cease to exist and all outstanding shares of Company common stock will be cancelled. Even if our stockholders

approve the liquidation of the Company pursuant to the Plan of Liquidation, at any time prior to the filing of Articles of Dissolution, the Board may amend or terminate the Plan of Liquidation without further stockholder approval if it determines that doing so would be in the best interest of the Company and our stockholders.

Due to the uncertainties as to the completion of the Portfolio Sale, the time that may be required to liquidate and dissolve the Company, the expenses associated with the liquidation of the Company and the ultimate settlement amount of our liabilities, it is difficult to predict the amounts which will ultimately be distributed to our stockholders should the Plan of Liquidation be approved by our stockholders and implemented by the Board. While a number of factors may change this amount, we estimate, as of September 20, 2021, that if the Plan of Liquidation is approved by our stockholders and we are able to successfully implement the Plan of Liquidation, then after the sale of all or substantially all of the Company’s assets and the payment of all of the Company’s outstanding liabilities, we will make total liquidating distributions to our stockholders of approximately $7.35 to $7.85 per share of the Company’s common stock. Although we have provided an estimated range of liquidating distributions based upon market, economic, financial and other circumstances and conditions existing as of September 20, 2021, we cannot determine at this time when, or potentially whether, we will be able to make any liquidating distributions to our stockholders or the amount of any such distributions. See “Risk Factors—Risks Related to the Plan of Liquidation” beginning on page 16.

The estimated range of liquidating distributions of $7.35 to $7.85 per share of the Company’s common stock as of September 20, 2021 is based upon (i) our estimate of the proceeds to be received by the Company from the Portfolio Sale, (ii) the amount of Company indebtedness, including any estimated penalties that we expect to incur at the time for early payment thereof, (iii) the amount of cash on hand, and (iv) the estimated expenses to be incurred in connection with the Portfolio Sale and the Plan of Liquidation. These estimates are based upon market, economic, financial and other circumstances and conditions existing as of September 20, 2021, and any changes in such circumstances and conditions could have a material effect on the ultimate amount of proceeds received by stockholders. See “Risk Factors—Risks Related to the Plan of Liquidation” beginning on page 16.

Yes. In considering the Board’s recommendation that you vote “FOR” the approval of the Portfolio Sale Proposal, the Liquidation Proposal, the Advisory Compensation Proposal and the Adjournment Proposal, you should be aware that certain of our directors, executive officers and their affiliated entities may have interests in the Portfolio Sale and our liquidation. See “The Portfolio Sale and Plan of Liquidation—Interests of certain stockholders, our directors, officers and employees” beginning on page 49.

If the Liquidation Proposal is not approved, the liquidation and dissolution of the Company will not occur. As a result, we will not be able to make any liquidating distributions from the proceeds of the sales of our properties, and the Company will continue to operate its business and the Board may reconsider other strategic alternatives available to the Company. If the Liquidation Proposal is not approved, the Company intends to evaluate all of its options with respect to any sales proceeds received from the sale of its properties or other assets, including pursuant to the Purchase Agreement. Such options may include, without limitation, the distribution of such proceeds to stockholders, the reinvestment of such proceeds in real estate investments or the use of such proceeds for other corporate purposes.

If the Portfolio Sale is not completed, the Company will not receive the proceeds of the Portfolio Sale. In addition, if the Portfolio Sale is terminated for certain specified reasons, the Company may be required to pay certain fees to Buyer. In the event that the stockholders approve the Liquidation Proposal, but the Portfolio Sale

is not completed, the Company will seek to sell its assets to another buyer or buyers. There can be no guarantee that the proceeds from such sale or sales would equal or exceed the proceeds contemplated by the Purchase Agreement. See “The Purchase Agreement—Termination of the Purchase Agreement” beginning on page 67.

If the Company makes distributions as a result of its implementation of the liquidation, a U.S. holder of Company common stock will realize, for federal income tax purposes, gain or loss equal to the difference between (i) the sum of the cash distributed to such stockholder directly plus the net value of any property transferred to any liquidating trust that may be established on the stockholder’s behalf; and (ii) the stockholder’s adjusted tax basis in his, her or its shares. Non-U.S. holders will be subject to U.S. federal income tax on any distributions received to the extent attributable to gains recognized by the Company on sales of real property located in the United States. See “The Portfolio Sale and the Plan of Liquidation—Material U.S. Federal Income Tax Consequences” beginning on page 41. We urge each stockholder to consult with his or her own tax advisors regarding tax consequences of distributions made pursuant to the Plan of Liquidation.

Pursuant to Maryland law, you are not entitled to appraisal or dissenters rights (or rights of an objecting stockholder) in connection with the Portfolio Sale or the Plan of Liquidation.

If our stockholders approve the Portfolio Sale Proposal and the Liquidation Proposal, we expect to make one or more liquidating distributions to our stockholders during the period of the liquidation process and to make the final liquidating distribution on or before a date that is within 24 months after stockholder approval of the Liquidation Proposal. If we have not sold all of our assets and paid all of our liabilities within 24 months after stockholder approval of the Liquidation Proposal, or if the Board otherwise determines that it is advantageous to do so earlier, we may transfer our remaining assets and liabilities to a liquidating trust and distribute interests in the liquidating trust to our stockholders. We cannot predict the exact amount to be distributed or the timing of the completion of the Plan of Liquidation. See “Proposal Two: Liquidation Proposal—General” beginning on page 72.

A liquidating trust is a trust organized for the primary purpose of liquidating and distributing the assets transferred to it after paying any of the remaining liabilities. If we form a liquidating trust, we will transfer to our stockholders beneficial interests in the liquidating trust. These interests will generally not be transferable by you.

The special meeting will take place at 11:00 a.m., Eastern time, on November 12, 2021. The special meeting will be held in virtual-only format via live webcast at www.virtualshareholdermeeting.com/CDOR2021SM2 (there is no physical location for the special meeting). You will need to have your control number that is included on your proxy card.

Holders of Company common stock as of the Record Date are entitled to receive notice of and to vote at the special meeting.

You may attend the special meeting and vote your shares by first registering at www.virtualshareholdermeeting.com/CDOR2021SM2. You will need to have your control number that is included on your proxy card. Stockholders will be able to listen, ask questions and vote, from their home or from any location. Check-in will begin 15 minutes prior to the special meeting. We encourage you to register for the special meeting prior to the start time leaving ample time for the check in.

You have one vote on each proposal presented at the special meeting for each share of Company common stock that you owned on the Record Date.

The Board has unanimously approved each of the proposals and recommends that you vote “FOR” the Portfolio Sale Proposal, “FOR” the Liquidation Proposal, “FOR” the Advisory Compensation Proposal, and “FOR” the Adjournment Proposal.

The presence at the special meeting, in person virtually or by proxy, of stockholders entitled to cast a majority of all the votes entitled to be cast at the special meeting will constitute a quorum for the conduct of business at the special meeting with respect to the matters such shares are entitled to vote upon. We will include abstentions, if any, in the calculation of the number of shares considered to be present at the meeting for purposes of determining the presence of a quorum. Failure to provide instructions to your broker, bank, or other nominee on how to vote will result in your shares not being counted as present at the meeting. A “broker non-vote” occurs when shares held by a broker, bank, or other nominee are represented at the meeting, but the broker, bank, or other nominee has not received voting instructions from the beneficial owner and does not have the discretion to direct the voting of the shares on a particular proposal but has discretionary voting power on other proposals. The only proposals to be voted on at the special meeting are regarded as “non-routine” matters, meaning that your broker, bank, or other nominee may not vote on these proposals without instructions from you.

As of the Record Date, there were 14,722,527 shares of Company common stock outstanding. 7,361,264 shares of Company common stock must be virtually represented at the special meeting to obtain a quorum on each proposal.

Approval of the Portfolio Sale Proposal requires the affirmative vote of a majority of the votes entitled to be cast by the holders of the Company common stock as of the Record Date. Because the required vote for this proposal is based on the number of outstanding shares of Company common stock entitled to vote at the special meeting, failure to vote your shares, abstentions, or a failure to provide instructions to your broker, bank, or other nominee with respect to this proposal will have the same effect as voting against approval of the Portfolio Sale Proposal.

Approval of the Liquidation Proposal requires the affirmative vote of a majority of the votes entitled to be cast by the holders of the Company common stock as of the Record Date. Because the required vote for this proposal is based on the number of outstanding shares of Company common stock entitled to vote at the special meeting, failure to vote your shares, abstentions, or a failure to provide instructions to your broker, bank, or other nominee with respect to this proposal will have the same effect as voting against approval of the Liquidation Proposal.

Approval of the Advisory Compensation Proposal and the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by the holders of the Company common stock present in person or represented by proxy at the special meeting and entitled to vote on each of these matters. If you fail to vote your shares or abstain from voting with respect to either of these proposals, or if you fail to provide instructions to your broker, bank or other nominee with respect to this proposal, your failure to vote will not have any effect on the outcome, assuming a quorum is present.

RES, SREP, and Mr. Blackham have entered into agreements with the Buyer to, among other things, vote all shares of Company common stock held by them and their affiliates affirmatively for the Portfolio Sale Proposal and against any other action that could reasonably be expected to impede, interfere with, delay, postpone or

materially and adversely affect the Portfolio Sale or the other transactions contemplated by the Purchase Agreement or that could reasonably be expected to result in any condition to the Portfolio Sale set forth in the Purchase Agreement not being fulfilled. Pursuant to their voting agreements, RES will provide, or cause to be provided, the consent and approval in satisfaction of the ISRA Approval at or prior to the special meeting.

These stockholders collectively hold approximately 62.2% of the outstanding shares of common stock. However, upon the occurrence of an adverse recommendation change in compliance with the Purchase Agreement by our board of directors to its recommendation to stockholders of the Portfolio Sale, the aggregate number of shares covered by the voting obligations set forth in these voting agreements will automatically be reduced (on a pro rata basis with each other) to the extent necessary so that the aggregate number of shares of common stock subject to the voting agreements represents no more than 35% of the shares of common stock outstanding and entitled to vote at the special meeting.

Unless there occurs an adverse recommendation change under the Purchase Agreement or the termination of the voting agreements, the aggregate voting power of RES and SREP is sufficient to assure approval of the proposals at the special meeting. See “The Portfolio Sale and The Plan of Liquidation—Voting Agreements” on page 48. The foregoing description of the voting agreements does not purport to be complete and is qualified in its entirety by reference to the form of the voting agreement which is attached as Appendix D to this proxy statement.

The Board unanimously recommends you vote (1) “FOR” the Portfolio Sale Proposal, (2) “FOR” the Plan of Liquidation; (3) “FOR” the Advisory Compensation Proposal; and (4) “FOR” the Adjournment Proposal. Please see “Portfolio Sale and The Plan of Liquidation—Reasons for the Portfolio Sale and the Plan of Liquidation and Recommendation of our Board of Directors” on page 31 for a discussion of the material factors, risks and countervailing factors considered by our board of directors in making its recommendations.

If you hold your shares of Company common stock directly, you may vote in person virtually at the special meeting or submit a proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed, postage paid envelope, or, if you prefer, you can submit voting instructions via telephonic or internet proxy authorization by following the instructions on the enclosed proxy card.

If you hold your shares of Company common stock in “street name” through a broker, bank, or other nominee, your broker, bank or other nominee will not vote your shares unless you provide instructions on how to vote. You must obtain a voting instruction form from the broker, bank, or other nominee that is the record holder of your shares and provide the broker, bank, or other nominee with instructions on how to vote your shares. Your broker, bank, or other nominee may not vote on the proposals without instructions from you. Failure to provide instructions to your broker, bank, or other nominee on how to vote will result in your shares not being counted as present at the special meeting.

If you fail to cast your vote in person virtually or by proxy, or if you hold your shares of Company common stock in “street name” through a broker, bank or other nominee and fail to give voting instructions to the record holder of your shares, or if you abstain from voting, it will have the same effect as a vote against the Portfolio Sale Proposal and the Liquidation Proposal.

If you fail to cast your vote in person virtually or by proxy, or if you hold your shares of Company common stock in “street name” through a broker, bank or other nominee and fail to give voting instructions to the record holder of your shares, or if you abstain from voting, it will not have any effect on the outcome of the Advisory Compensation Proposal or the Adjournment Proposal, assuming a quorum is virtually present.

If you properly submit a proxy card prior to the special meeting, or you properly submit a proxy via telephonic or internet proxy authorization, your shares will be voted as you direct. If you properly submit a

proxy card prior to the special meeting, but do not indicate how to vote your shares, your shares will be voted (1) “FOR” the Portfolio Sale Proposal, (2) “FOR” the Liquidation Proposal; (3) “FOR” the Advisory Compensation Proposal; and (4) “FOR” the Adjournment Proposal.

If you hold shares of Company common stock on the Record Date but transfer these shares prior to the special meeting, you will retain your right to vote at the special meeting, but not the right to receive the Plan of Liquidation consideration. Only a person who holds shares of Company common stock at the time of the distributions pursuant to the Plan of Liquidation is entitled to receive such distributions.

Yes. You may change or revoke a previously granted proxy at any time before it is voted at the special meeting by:

To be effective, a proxy revocation must be received by us at or prior to the special meeting. Attendance at the virtual special meeting will not, in itself, constitute revocation of a previously authorized proxy

If your shares are held in “street name,” then you may change your vote by submitting new voting instructions by contacting your broker, bank or other nominee.

Our stockholders are not entitled to exercise any appraisal or dissenters’ rights. For more information, see “No Appraisal or Dissenters’ Rights” on page 79.

We file certain information with the SEC. This information is available at the internet site the SEC maintains at http://www.sec.gov and on our website at http://www.condorhospitality.com. Information contained on our website is not part of, or incorporated by reference in, this proxy statement. You can also request copies of these documents from us. See “Where You Can Find More Information” on page 79.

The SEC has adopted a rule concerning the delivery of documents filed by us with the SEC, including proxy statements, which allows us to send a single proxy statement to any household at which two or more stockholders reside if they share the same last name or we reasonably believe they are members of the same family, unless we have received contrary instructions from one or more of the securityholders. This procedure is referred to as “householding.” This rule benefits both you and us. It reduces the volume of duplicate information received at your household and helps us reduce expenses. Each stockholder subject to householding will continue to receive a separate proxy card or voting instruction card.

We will promptly deliver, upon written or oral request, a separate copy of this proxy statement to a stockholder at a shared address to which a single copy was previously delivered. If you received a single copy of this proxy statement, but you would prefer to receive your own copy, you may direct requests for separate copies to Condor Hospitality Trust, Inc., 1800 W. Pasewalk Avenue, Suite 120, Norfolk, Nebraska 68701, Attention: Secretary or call us at (402) 371-2520. Also, if your household currently receives multiple copies of disclosure documents and you would like to receive just one set, please contact us at the same address and phone number.

If you have more questions about the special meeting, you should contact us as follows:

If you hold your shares in “street name” through a broker, bank or other nominee, you may also call your broker, bank or other nominee for additional information.

You should rely only on the information provided in or incorporated by reference into this proxy statement. We have not authorized anyone to provide you with different information. You should assume that the information in this proxy statement is accurate only as of the date of this proxy statement or, where information relates to another date set forth in this proxy statement, then as of that date.

In deciding how to vote with respect to the approval of the Portfolio Sale Proposal and the Liquidation Proposal, you should carefully consider the following risk factors and all the other information contained in this proxy statement. Each of the risks described could result in a decrease in the proceeds ultimately distributed to you in connection with the Portfolio Sale and the Plan of Liquidation or otherwise with respect to your shares, or could adversely affect the timing of distributions.

The occurrence of any of these events may impair our ability to conduct our business and may reduce the amounts otherwise available for distribution to our stockholders.

The Purchase Agreement contains provisions that make it more difficult for us to enter into a transaction with a party other than the Buyer regarding an alternative acquisition proposal. These provisions include the general prohibition on our soliciting any third-party acquisition proposal or entering into any agreement for an alternative acquisition proposal, and the requirement that we pay a termination fee of $5,000,000 if the Purchase Agreement is terminated in specified circumstances. See “The Purchase Agreement—Conduct and Transaction of Business Prior to Closing—Exclusivity; No Solicitations” beginning on page 62 and “The Purchase Agreement —Termination of the Purchase Agreement—Termination Fees” beginning on page 68.

These provisions of the Purchase Agreement could discourage a third party that might have an interest in acquiring the Company, from considering or proposing a transaction, even if that party were prepared to pay consideration with a higher value relative to the purchase price to be paid by the Buyer for the Portfolio. Furthermore, the termination fee may result in a potential acquiror offering to pay a lower purchase price to acquire the Company than it might otherwise have offered to pay. The payment of the termination fee could also have an adverse effect on our financial condition and may reduce the assets available for distribution to our stockholders.

In addition to the required approval of our stockholders, the closing of the Portfolio Sale is subject to several closing conditions, some of which are not within our control, including:

We cannot be certain when or if the conditions to the closing of the Portfolio Sale will be satisfied, and, as a result, even if the Portfolio Sale Proposal is approved by our stockholders at the special meeting, there can be no assurance that the Portfolio Sale will be completed.

If our stockholders approve the Liquidation Proposal, our Board will have the authority to sell any and all of the Company’s assets on such terms and to such parties, including affiliated parties, as the Board determines

appropriate, even if such terms are less favorable than those assumed for the purpose of estimating our range of liquidating distributions. Notably, our stockholders will have no subsequent opportunity to vote on such matters and will, therefore, have no right to approve or disapprove the terms of such sales.

Prior to the closing of the Portfolio Sale, we will remain subject to all of the risks of operating the Portfolio today, including those described in the “Risk Factors” sections included in our annual, quarterly and current reports filed with the SEC. In addition, such risks may result in our incurring additional obligations and liabilities which may be retained by us following the closing of the Portfolio Sale and, in such event, could reduce the amounts ultimately available for distribution to our stockholders.

In the event that Buyer defaults in performing its obligations under the Purchase Agreement to proceed to closing, the Company, as its sole and exclusive remedy for any such default, will be entitled to terminate the Purchase Agreement by giving Buyer written notice to such effect, and receive the $15,000,000 deposited by Buyer in escrow as liquidated damages for Buyer’s default. The Company has no right to bring an action for specific performance in order to compel Buyer to comply with its covenants or consummate the Portfolio Sale. In the event that the Portfolio Sale is not consummated, there is no guarantee that the Company will be able to sell the Portfolio for an amount equal to or exceeding the price contemplated by the Purchase Agreement. The foregoing factors may reduce the assets available for liquidating distributions to the Company’s stockholders.

If our stockholders approve the Liquidation Proposal and it is consummated, you will no longer participate in any future earnings or growth of our assets or benefit from any increases in the value of our assets once such assets are sold. It is possible that continuing with the status quo or pursuing one or more other alternatives would result in greater returns on your investment. In that case, we will be foregoing those alternative opportunities if we implement the Plan of Liquidation. If the Liquidation Proposal is not approved by our stockholders, our board of directors may reconsider other strategic alternatives, including, but not limited to:

Although we have provided an estimated range of total liquidating distributions of $7.35 to $7.85 per share of the Company’s common stock, there can be no assurances regarding the amounts of any liquidating distributions or the timing thereof. Your total return will depend on the amount you paid for your shares and the date on which you purchased such shares. Please consult with your financial advisor for more information about your potential total return.

Even if our stockholders approve the Liquidation Proposal, at any time prior to the filing of the Articles of Dissolution, the Board may amend or terminate the Plan of Liquidation without further stockholder approval if it determines that doing so would be in the best interest of the Company and our stockholders. Thus, we may decide to conduct the liquidation differently than described in this proxy statement or not at all.

The estimated range of the liquidating distributions per share set forth in this proxy statement assumes that the Company will continue to qualify as a REIT under the Tax Code during the entire liquidation process and, therefore, no provision has been made for federal income taxes. So long as we qualify as a REIT and distribute all of our taxable income each year, we generally will not be subject to federal income tax. While the Board does not presently intend to terminate our REIT status prior to the final liquidating distribution of our assets and our dissolution, pursuant to the Plan of Liquidation, the Board may take actions that would result in such a loss of REIT status. To qualify as a REIT, we must satisfy various ongoing requirements relating to the nature of our gross assets and income, the timing and amount of distributions and the composition of our stockholders. There can be no assurance that the Company will be able to maintain its REIT qualification. We may encounter difficulties satisfying these requirements as part of the liquidation process. If we lose our REIT status, we would be taxable as a corporation for federal income tax purposes and would be liable for federal income taxes, including any applicable alternative minimum tax, at the corporate rate with respect to our entire income from operations and from liquidating sales of our assets for the taxable year in which our qualification as a REIT terminates and in any subsequent years, and we would not be entitled to a tax deduction for distributions that we make. We would also be subject to increased state and local taxes. As a result of these consequences, our failure to qualify as a REIT could substantially reduce the funds available for distribution to our stockholders.

The sale of one or more of our properties may be considered a prohibited transaction under the Tax Code. Any “inventory-like” sales or dealer sales could be considered such a prohibited transaction. If we are deemed to have engaged in a “prohibited transaction” (i.e., sale of a property held by us primarily for sale in the ordinary course of our trade or business), all net gain that we derive from such sale would be subject to a 100% penalty tax. The Tax Code sets forth a safe harbor for REITs that wish to sell property without risking the imposition of the 100% penalty tax. The principal requirements of the safe harbor are that: (i) the REIT must hold the applicable property for not less than two years for the production of rental income prior to its sale; (ii) the aggregate expenditures made by the REIT, or any partner of the REIT, during the two-year period preceding the date of sale which are includible in the basis of the property do not exceed 30% of the net selling price of the property; and (iii) property sales by the REIT during the particular tax year satisfy at least one of the following thresholds: (a) seven sales in the current year; (b) sales in the current year that do not exceed 10% of the REIT’s assets as of the beginning of the year (as measured by either fair market value or tax basis); or (c) sales in the current year that do not exceed 20% of the REIT’s assets as of the beginning of the year, and sales over a three-year period do not exceed, on average, 10% per annum of the REIT’s assets, in each case as measured by either fair market value or tax basis. The sale of our properties in anticipation of or in connection with the Plan of Liquidation likely will not satisfy the above prohibited transaction safe harbor; however based upon the facts and circumstances of such sale transactions, we believe that such sales should nevertheless not be treated as prohibited transactions.

If we desire to sell a property pursuant to a transaction that does not satisfy the safe harbor, we may be able to avoid the prohibited transaction tax if we hold and sell the property through a TRS. In that case, any gain would be taxable to the TRS at regular corporate income tax rates. We may decide to forego the use of a TRS in a transaction that does not meet the safe harbor based our own internal analysis, the opinion of counsel or the opinion of other tax advisors that the disposition will not be subject to the prohibited transaction tax. In cases where a property disposition is not effected through a TRS, the Internal Revenue Service could assert that the disposition constitutes a prohibited transaction. If such an assertion were successful, all of the net gain from the sale of the property will be payable as a tax which will have a negative impact on cash flow and the ability to make cash distributions.

As a REIT, the value of our ownership interests held in our TRSs may not exceed 20% of the value of all of our assets at the end of any calendar quarter. If the IRS were to determine that the value of our interests in all of our TRSs exceeded 20% of the value of our total assets at the end of any calendar quarter, then we could fail to qualify as a REIT. If we determine it to be in our best interest to own a substantial number of our properties through one or more TRSs, then it is possible that the IRS may conclude that the value of our interests in our TRSs exceeds 20% of the value of our total assets at the end of any calendar quarter and therefore cause us to

fail to qualify as a REIT. Additionally, as a REIT, generally no more than 25% of our gross income with respect to any year may be from sources other than real estate. Distributions paid to us from a TRS are considered to be non-real estate income. Therefore, we may fail to qualify as a REIT if distributions from all of the Company’s TRSs, when aggregated with all other non-real estate income with respect to any one year, are more than 25% of the Company’s gross income with respect to such year.

Consequently, the amount available for distribution to our stockholders could be significantly reduced.

The amounts that may ultimately be available for distribution to our stockholders are not yet known, and while we have included in this proxy statement estimates as to the approximate amounts of the aggregate final distributions to our stockholders, there are many factors that may affect the amounts available for distribution to our stockholders, including, among other things, the net proceeds available to us upon sale or disposition of our assets (including the Portfolio Sale), the amount of any taxes, including withholding taxes and transfer taxes, imposed with respect to any such sale or disposition (including the Portfolio Sale), the operating costs and amounts to be set aside for claims, liabilities and other obligations prior to and during the liquidation and winding-up process, and the time required to complete the liquidation of our assets.

Following the Portfolio Sale, we will retain liabilities that must be satisfied prior to any final distribution to our stockholders, and some of those liabilities are uncertain. Significant time could be required to resolve some of these liabilities, which could impact both the timing and the amount of any final distribution to our stockholders. Also, some liabilities may involve third party disputes or may be beyond our control. If we have underestimated our existing obligations and liabilities or if unanticipated or contingent liabilities arise, the amount and timing of distributions to our stockholders could be less than the amounts we have estimated. In addition, we may be required under applicable law, or it may be necessary in order to maintain our REIT status, to hold back for distribution at a later date some of the estimated amounts that we currently anticipate distributing to our stockholders. For the foregoing reasons, among others, there can be no assurance as to the timing and amount of any final distributions to our stockholders, even if the Portfolio Sale is completed and the Liquidation Proposal is approved.

Before making the liquidating distributions to our stockholders, we will need to pay or arrange for the payment of all of our transaction costs in the liquidation, all other costs and all valid claims of our creditors. The Board may also decide to acquire one or more insurance policies covering unknown or contingent claims against us or them, for which we would pay a premium which has not yet been determined. The Board may also decide to establish a reserve fund to pay these contingent claims. The amounts of transaction costs in the liquidation are not yet final, so we have used estimates of these costs in calculating the amounts of our projected liquidating distributions. To the extent that we have underestimated these costs in calculating our projections or we incur unforeseen additional costs, our actual liquidating distributions may be lower than our estimated range. In addition, if the claims of our creditors are greater than we have anticipated or we decide to acquire one or more insurance policies covering unknown or contingent claims against us, our liquidating distributions may be delayed or reduced. Further, if a reserve fund is established, payment of liquidating distributions to our stockholders may be delayed or reduced.

The REIT provisions of the Tax Code generally require that each year we distribute as dividends to our stockholders at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and by excluding any net capital gains). Our liquidating distributions generally will not qualify as deductible dividends for this purpose unless, among other things, we make such distributions within 24 months after the adoption of the Plan of Liquidation.

Conditions may arise which cause us not to be able to liquidate within such 24-month period. In such event, rather than retain our assets and risk losing our status as a REIT, we may elect, for tax purposes, to transfer our remaining assets and liabilities to a liquidating trust or convert the Company to a liquidating entity that is a limited liability company, partnership or a trust. In addition, the Board may cause the Company to transfer its remaining assets and liabilities to a liquidating trust or to convert the Company to another liquidating entity if the Board determines, in its discretion, that it is advantageous or appropriate to do so. Such a transfer or conversion would be treated as a distribution of our remaining assets to our stockholders, together with a contribution of the assets to the liquidating trust or other liquidating entity. As a result, you would recognize gain to the extent that your share of the cash and the net fair market value of any assets (less liabilities assumed) received or initially held by the liquidating trust or other liquidating entity was greater than your basis in your Company common stock, regardless of whether you contemporaneously receive a distribution of cash with which to satisfy any resulting tax liability, and the Company may have withholding tax obligations with respect to foreign stockholders. See “The Portfolio Sale and the Plan of Liquidation—Material United States Federal Income Tax Consequences—Use of a Liquidating Trust.” In addition, it is possible that the fair market value of the assets received or initially held by the liquidating trust or other liquidating entity, as estimated for purposes of determining the extent of your gain at the time at which interests in the liquidating trust or other liquidating entity are distributed to the stockholders, will exceed the cash or fair market value of property received by the liquidating trust or other liquidating entity on a later sale of the assets. In this case, you could recognize a loss in a taxable year subsequent to the taxable year in which the gain was recognized, the deductibility of which may be limited under the Tax Code. The distribution to stockholders of interests in a liquidating trust or the conversion of the Company to a liquidating entity may also cause ongoing adverse tax consequences (particularly to tax-exempt and foreign stockholders, which may be required to file U.S. tax returns with respect to their share of income generated by the liquidating trust or other liquidating entity).

Once our stockholders approve our dissolution in accordance with the Plan of Liquidation, we will generally be committed to winding-up our operations. This may adversely affect the value that a potential acquirer might place on us or our ability to sell the Portfolio if the Portfolio Sale does not occur, or any remaining assets if the Portfolio Sale occurs. It may also preclude other possible courses of action not yet identified by our board of directors.

If our stockholders approve the Liquidation Proposal, we intend to dispose of our assets, discharge our liabilities and distribute to our stockholders any remaining assets pursuant to the Plan of Liquidation as soon as practicable. In the event that it should not be feasible, in the opinion of the Board, for the Company to pay, or adequately provide for, all of our debts and liabilities, or if the Board shall determine it is advisable, the Board may establish a liquidating trust to which the Company could distribute in kind its unsold assets.

Any reserve fund or assets transferred to a liquidating trust established by us may not be adequate to cover any contingent expenses and liabilities. Under Maryland law, if we make distributions and fail to maintain an adequate reserve fund or fail to transfer adequate assets in a liquidating trust for payment of our contingent expenses and liabilities, each stockholder could be held liable for payment to our creditors of such amounts owed to creditors which we fail to pay. The liability of any stockholder would be limited to the amount of such liquidating distributions previously received by such stockholder from us or the liquidating trust. Accordingly, in such event, a stockholder could be required to return all such distributions received from the Company or the liquidating trust. If a stockholder has paid taxes on liquidating distributions previously received, a repayment of all or a portion of such amount could result in a stockholder incurring a net tax cost if the stockholder’s repayment of an amount previously distributed does not cause a commensurate reduction in taxes payable. Our obligations under our loans are expected to be paid off in full in connection with the closing of the Portfolio Sale. The remaining liabilities consist principally of accounts payable, accrued expenses and other liabilities for expenses incurred in the ordinary course of operating our business. We may decide to establish a reserve fund or transfer assets to a liquidating trust to provide for any unknown or outstanding liabilities and expenses. If the

stockholders approve the Liquidation Proposal, we will continuously monitor expenses and any other foreseeable liabilities the Company may incur in implementing the Plan of Liquidation to seek to ensure that an adequate reserve fund is maintained or adequate assets are transferred to a liquidating trust to discharge these liabilities in full.

In considering the Board’s recommendations that you vote “FOR” the approval of the Portfolio Sale Proposal and “FOR” the approval of the Liquidation Proposal, you should be aware that certain of our directors, executive officers and their affiliated entities have interests in the Portfolio Sale and Plan of Liquidation. The Board was aware of these interests and considered them in its decision to approve the Portfolio Sale and the Plan of Liquidation. See “The Portfolio Sale and the Plan of Liquidation—Interests of certain stockholders, our directors, officers and employees” beginning on page 49.

Following the Portfolio Sale and through our subsequent wind-up and liquidation, we will likely be required to continue to comply with the applicable reporting requirements of the Exchange Act, even if compliance with these reporting requirements is economically burdensome. To the extent such compliance is required, in order to curtail expenses, we may seek relief from the Securities and Exchange Commission (the “SEC”) from certain of the reporting requirements under the Exchange Act. We anticipate that, if such relief is granted, we would continue to file current reports on Form 8-K to disclose material events relating to our wind-up and liquidation, along with any other reports that the SEC might require, but would discontinue filing Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.

Historically, extraordinary corporate actions such as the proposed Portfolio Sale and Plan of Liquidation, and the actions and transactions contemplated thereby, sometimes lead to securities class action lawsuits being filed against the company taking such actions. We may become involved in this type of litigation as a result of the Portfolio Sale Proposal and/or the Liquidation Proposal, which risk may be increased if our stockholders approve these proposals. As of the date of this proxy statement, no such lawsuits related to the Portfolio Sale or the Plan of Liquidation, and the actions and transactions contemplated thereby, were pending or, to our knowledge, threatened. However, if such a lawsuit is filed against us, the litigation is likely to be expensive, and, even if we ultimately prevail, the process will divert our attention from implementing the Portfolio Sale and following the closing thereof, our wind-up and liquidation. If we were not to prevail in such a lawsuit, we cannot predict the amount of any damages for which we may be obligated and if any plaintiffs are successful in obtaining an injunction prohibiting us from consummating the Plan of Liquidation or from completing the Portfolio Sale, such an injunction may delay the Plan of Liquidation or the Portfolio Sale or prevent them from being completed. However, if applicable, any such damages may be significant and may reduce the amounts available for final distributions to our stockholders.

This proxy statement (including statements about the expected timing, completion and effects of the Portfolio Sale and the Plan of Liquidation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts, and in some cases, can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “project”, “plan”, the negative version of these words or other similar expressions. Readers are cautioned not to place undue reliance on any such forward-looking statements.

All forward-looking statements speak only as of the date hereof and are based on current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements. They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. We may not be able to complete the proposed Portfolio Sale and the Plan of Liquidation as described herein or at all because of a number of factors, including without limitation, the following: (i) the occurrence of any event, change or other circumstances that could give rise to the termination of the Portfolio Sale and the Plan of Liquidation; (ii) unknown, underestimated or undisclosed commitments or liabilities; (iii) the inability to complete the Portfolio Sale or the Plan of Liquidation due to the failure to obtain the approval of the Company’s stockholders or the failure to satisfy the other conditions to the proposed Portfolio Sale and the Plan of Liquidation; (iv) risks related to disruption of management’s attention from the Company’s ongoing business operations due to the proposed Portfolio Sale and the Plan of Liquidation; (v) the effect of the announcement of the proposed Portfolio Sale and the Plan of Liquidation on the ability to retain and hire key personnel, maintain relationships with franchisors, management companies and suppliers, and maintain operating results and business generally; (vi) the risk that any necessary approvals or consents will not be received in a timely manner or that the proposed Portfolio Sale and the Plan of Liquidation will not be consummated in a timely manner; (vii) adverse changes in U.S. and non-U.S. governmental laws and regulations; (viii) risks related to uncertainty and disruption in global economic markets as a result of COVID-19 (commonly referred to as the coronavirus) or similar pandemics; and (ix) the risk of litigation, including stockholder litigation in connection with the proposed Portfolio Sale and Plan of Liquidation, and the impact of any adverse legal judgments, fines, penalties, injunctions or settlements.

Actual results may differ materially from those indicated by such forward-looking statements. In addition, the forward-looking statements represent our views as of the date on which such statements were made. We anticipate that subsequent events and developments may cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date hereof. We expressly disclaim a duty to provide updates to forward-looking statements, whether as a result of new information, future events or other occurrences, except as required by law. Please see “Risk Factors” for a discussion of some of the risks and uncertainties that could cause actual results to differ materially from those presented in certain forward-looking statements.

Additional factors that may affect our business or financial results are described in the risk factors included in our filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

The following table provides summary information regarding the Portfolio as of the date of this Proxy Statement.

This proxy statement is being furnished to our stockholders in connection with the solicitation of proxies by the Board for use at an special meeting to be held on November 12, 2021 at 11:00 a.m., Eastern time. The special meeting will be held in virtual-only format via live webcast at www.virtualshareholdermeeting.com/CDOR2021SM2 (there is no physical location for the special meeting). You will need to have your control number that is included on your proxy card.

The purpose of the special meeting is for you to:

Our stockholders must approve the Portfolio Sale Proposal for the Portfolio Sale to occur. Our stockholders must approve the Liquidation Proposal for the liquidation to occur. A copy of the Purchase Agreement and the Plan of Liquidation are attached as Appendix A and Appendix B, respectively, to this proxy statement, which we encourage you to read carefully in their entirety. Please see “Purchase Agreement” on page 54 below and “Proposal Two: Plan of Liquidation” on page 72 below for a summary of their material provisions.

Only holders of shares of Company common stock at the close of business on October 13, 2021, which is the Record Date for the special meeting, are entitled to receive notice of and vote at the special meeting or any postponements or adjournments of the special meeting. On the Record Date, there were 14,722,527 shares of Company common stock outstanding.

The presence at the special meeting, represented in person or by proxy, of stockholders entitled to cast a majority of all the votes entitled to be cast at the special meeting will constitute a quorum for conduct of business at the special meeting. A quorum is necessary to hold the special meeting. Abstentions will be counted as shares present for the purposes of determining a quorum.

Approval of each of the Portfolio Sale Proposal and the Liquidation Proposal requires the affirmative vote of a majority of the votes entitled to be cast by the holders of the Company common stock.

Because the required vote for each of the Portfolio Sale Proposal and the Liquidation Proposal is based on the number of votes entitled to be cast by the holders of our Company common stock rather than on the number of votes cast, failure to vote the shares of Company common stock that you own (including as a result of failing to provide instructions to your broker, bank or other nominee) and abstentions will have the same effect as voting against approval of the Portfolio Sale Proposal and against the approval of the Liquidation Proposal.

Approval of the Advisory Compensation Proposal and the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by the holders of the Company common stock present in person or represented by proxy at the special meeting and entitled to vote on each of these matters. Approval of these proposals is not a condition to the completion of the Portfolio Sale or the Plan of Liquidation. For these proposals, if you fail to vote your shares or abstain from voting with respect to either of these proposals, or if you fail to provide instructions to your broker, bank or other nominee, such failure will not have any effect on the outcome of these proposals, assuming a quorum is present.

Each share of Company common stock that was outstanding on the Record Date entitles the holder to one vote on each proposal presented at the special meeting for which such shares are entitled to vote on at the special meeting.

You may attend the special meeting and vote your shares by first registering at www.virtualshareholdermeeting.com/CDOR2021SM2. You will need to have your control number that is included on your proxy card. Once registered, an email will be sent containing instructions on how to join the webcast through the Internet. Stockholders will be able to listen, ask questions and vote, from their home or from any location. We encourage you to register for the special meeting prior to the start time leaving ample time for the check in.

Stockholders of record may cause their shares of Company common stock to be voted by proxy using one of the following methods:

Regardless of whether you plan to virtually attend the special meeting, we request that you complete and return your proxy as promptly as possible.

If you own shares through a broker, bank or other nominee (i.e., in “street name”), you must provide voting instructions in accordance with the instructions on the voting instruction card that your broker, bank or other nominee provides to you. You should instruct your broker, bank or other nominee as to how to vote your shares, following the directions contained in such voting instruction card. If you have not received such voting instructions or require further information regarding such voting instructions, contact your broker, bank or other nominee who can give you directions on how to vote your shares.

If you hold your shares of Company common stock through a broker or nominee and wish to vote, you must follow the voting instructions provided to you by your broker or other nominee. If you do not receive a voting instruction card from your broker, please contact your broker promptly to obtain the voting instruction card.

Brokers who hold shares in street name for customers have the authority to vote on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are precluded from exercising their voting discretion with respect to approval of non-routine matters, such as the approval of the Liquidation Proposal and the Portfolio Sale Proposal. As a result, absent specific instructions from the beneficial owner of such shares, brokers will not vote those shares. This is referred to as a “broker non-vote”. Broker non-votes will be considered as “present” for purposes of determining a quorum. Broker non-votes will have the effect of a vote “AGAINST” the Liquidation Proposal and Portfolio Sale Proposal, but will have no effect on the Advisory Compensation Proposal or the Adjournment Proposal.

If you submit a proxy, your shares will be voted at the special meeting as you indicate on your proxy. If no instructions are indicated on your signed proxy card, your shares will be voted (1) “FOR” the Portfolio Sale Proposal, (2) “FOR” the Liquidation Proposal; (3) “FOR” the Advisory Compensation Proposal; and (4) “FOR” the Adjournment Proposal.

You may revoke your proxy at any time, but only before the proxy is voted at the special meeting, in any of three ways:

Virtual attendance at the special meeting will not, in itself, constitute revocation of a previously granted proxy. If you own your shares in “street name,” you may revoke or change previously delivered voting instructions by following the instructions provided by the broker, bank or other nominee that is the registered owner of the shares.

We will pay the costs of soliciting proxies for the special meeting. Our board of directors is soliciting your proxy on our behalf. Our directors and officers and our employees may solicit proxies by telephone and facsimile, by mail, on the internet or in person. They will not be paid any additional amounts for soliciting proxies. We also expect to incur approximately $50,000 in expenses related to printing of these proxy materials. We will also request that banking institutions, brokerage firms, custodians, directors, nominees, fiduciaries and other like parties forward the solicitation materials to the beneficial owners of Company common stock held of record by such persons, and we will, upon request of such persons, reimburse forwarding charges and out-of-pocket expenses.

If a quorum is not present in person or represented by proxy at the special meeting, the chairperson of the meeting may adjourn the meeting from time to time to a date not more than 120 days after the Record Date for the special meeting, without notice other than announcement at the special meeting. At the adjourned special meeting at which a quorum is virtually present, any business may be transacted that might have been transacted at the special meeting as originally noticed.

Although it is not currently expected, if you are a holder of Company common stock, you may be asked to approve one or more adjournments of the special meeting to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Portfolio Sale Proposal or the Liquidation Proposal. The persons named as proxies on the proxy card will only have the authority to approve such adjournments as instructed by you or your proxy. Any adjournment of the special meeting for the purpose of soliciting additional proxies will allow our stockholders who have already granted their proxies to revoke them at any time prior to their use. Please see “Proposal Four: The Adjournment Proposal” on page 76.

We will bear the cost of soliciting proxies for the special meeting. Our board of directors is soliciting your proxy on our behalf. Our directors and officers and our employees may solicit proxies by telephone and facsimile, by mail, on the internet or in person. They will not be paid any additional amounts for soliciting proxies. We also expect to incur approximately $50,000 in expenses related to printing of these proxy materials. We will also request that banking institutions, brokerage firms, custodians, directors, nominees, fiduciaries and other like parties forward the solicitation materials to the beneficial owners of Company common stock held of record by such persons, and we will, upon request of such persons, reimburse forwarding charges and out-of-pocket expenses.

The Company began as a publicly traded REIT in 1994, when it conducted its initial public offering, pursuing a strategy of owning midscale and economy hotels, and at its peak ownership in 2008, owned 128 such hotels. The slow recovery of the Company’s legacy hotels compared to higher priced hotels following an economic downturn in 2008 led the Company to reevaluate its operating model and engage in a strategic plan to reduce its ownership of midscale and economy hotels in favor of newer premium-branded upper-midscale and upscale select-service hotels located primarily in major secondary markets. From October 1, 2015 through March 30, 2018, the Company acquired 15 hotels in accordance with its strategic plan and completed its exit from the ownership of midscale and economy hotels with the sale of all of those remaining hotels, retaining only one select-service hotel from the previous portfolio.

During the course of implementing its strategic plan, the Company periodically explored potential avenues for raising capital to purchase additional hotels, however, as of June 30, 2018, new capital had not been sourced. Thereafter, the Company began a process to consider potential strategic alternatives and reached out to over 200 potential bidders to gauge interest in a strategic transaction with the Company. The Company entered into 45 non-disclosure agreements between October 1, 2018 and October 25, 2018 with potential bidders and subsequently, on July 19, 2019, the Company entered into an agreement (the “NHT Agreement”) to be acquired by affiliates of NexPoint Hospitality Trust (“NHT”) pursuant to which the holders of the Company’s common stock would receive $11.10 per share upon the consummation of such acquisition. On September 18, 2020, the Company provided written notice of termination of the NHT Agreement to NHT due to the failure of NHT to consummate the acquisition of the Company. On October 15, 2020, the Company and NHT entered into a settlement agreement pursuant to which NHT agreed to pay the Company $7,000,000 in three installments in satisfaction of its obligations under the NHT Agreement.

During the pendency of the NHT Agreement, the Company did not receive any unsolicited acquisition proposals from third parties. Following the termination of the NHT Agreement, the Company’s board of directors at a regularly-scheduled meeting on October 29, 2020 discussed whether the Company could create additional stockholder value through acquisitions, the Board’s view that the Company’s growth was being constrained by stock market conditions and the price of the Company common stock, the significant costs of remaining a public company without identified financing for future growth, and the risks and uncertainty of remaining an independent public company, given the Company’s smaller scale relative to hotel REITs, which could impede the Company’s ability to raise new capital. The Board consequently resolved to resume its consideration of potential strategic alternatives for the Company. During this meeting, the Board discussed potential candidates to acquire the Company and directed Mr. Blackham to inquire of a potential acquiror (“Party A”) if Party A had such an interest. The Company and Party A entered into a non-disclosure agreement on November 4, 2020 with customary provisions for the exchange of confidential, non-public or proprietary information.

On December 31, 2020, the Company did not satisfy its financial covenants under a mortgage agreement and, even though the loan payments were current, the Company was advised by its lender that the Company was in default on that mortgage, which under certain conditions could also result in a potential default on the Company’s credit facility due to a cross-default clause within the credit facility. As a result, the Company’s independent registered public accounting firm included a paragraph in its audit opinion for the Company’s financial statements for the fiscal year ended December 31, 2020 expressing its substantial doubt about the Company’s ability to continue as a going concern. On April 9, 2021, the Company issued a press release disclosing the same.

Discussions with Party A were terminated by the Company on June 11, 2021 after Party A and the Company were unable to agree upon the terms of the acquisition of the Company by Party A, including as to price.

At a special meeting on June 17, 2021, with all directors present by video conference along with counsel from McGrath North Mullin & Kratz, PC LLO (“McGrath North”), the Board discussed the cessation of discussions with Party A, the prior lack of success with merger candidates, and other potential strategic alternatives for the Company, including a potential sale and/or liquidation of the Company. McGrath North discussed, among other things, the Board’s duties under the MGCL when considering strategic alternatives, including a potential sale and liquidation of the Company. The Board reviewed a June 2021 general industry report prepared by Hodges Ward Elliott, LLC (“HWE”) which, among other things, indicated that real estate

sales of select-service hotels were trending up in volume and pricing. After discussion, by unanimous vote, the directors authorized the Company to enter into a listing agreement with HWE to offer for sale the Company hotels, with any decision to sell hotels to be reserved to the Company. The directors by unanimous vote further approved and directed the Company to publicly announce that the Company was exploring strategic alternatives and the HWE engagement.

On June 17, 2021, the Company and HWE entered into an exclusive listing agreement whereby HWE was authorized to advertise and market the Portfolio for sale, in an all cash transaction, or upon such other terms as acceptable to the Company. The terms of the listing agreement included a fee payable to HWE of 0.45% of the gross sale price upon closing of a transaction (“HWE Fee”), or a flat $250,000 fee if Party A or either of the Company’s major stockholders, SREP or RES, or their affiliates, were purchasers of the Portfolio. The listing agreement terminates on October 31, 2021 and HWE is entitled to the HWE Fee if a contract for sale is entered into during or within 90 days following expiration of the term of the listing agreement to a person or entity to whom the Portfolio was marketed and who signed a non-disclosure agreement.

On June 21, 2021, the Company issued a press release announcing that the Board was evaluating strategic alternatives to enhance stockholder value and the engagement of HWE to market for sale the Portfolio.

Following the issuance of the press release, HWE commenced marketing the Portfolio. Between June 21, 2021 and August 12, 2021 HWE contacted over 436 potential bidders of whom 126 executed non-disclosure agreements with customary terms, including Blackstone. Each party that entered into a non-disclosure agreement, including Blackstone, was provided access by HWE to a virtual data room which contained hotel property information and STR Reports. Jeffer Mangels Butler & Mitchell LLP (“Jeffer Mangels”) and McGrath North, law firms representing the Company, drafted a hotel purchase and sale agreement, which HWE added to the virtual data room. During the marketing process, HWE, in consultation with Mr. Blackham, instructed the potential purchasers to submit initial indicative offers on August 12, 2021, of which eleven were received, and to submit best and final offers on August 20, 2021, of which seven were received. We refer to the eleven prospective purchasers who submitted indicative offers, aside from Buyer, as “Party B” through “Party K”.

On July 20, 2021, HWE and the Company received a preliminary non-binding offer from Party B to purchase the entirety of the Portfolio for $300 million in cash, following, among other matters, the satisfactory outcome of its due diligence review. Between July 20, 2021 and August 2, 2021, HWE, Mr. Blackham and Party B discussed and exchanged drafts of an access agreement to permit Party B to commence early on-site inspections of the Portfolio. The access agreement was not finalized or entered into by Party B or the Company, as the parties were unable to agree on terms including cash deposits and fee reimbursement. Party B reaffirmed its offer of $300 million for the Portfolio and it indicated it would submit the offer on the due date communicated by HWE to prospective purchasers.

On August 6, 2021, HWE submitted a marketing update report to the Company, which Mr. Blackham shared with the board of directors, which identified 116 potential purchasers, of which HWE evaluated eleven as having a high interest level.

On August 8, 2021, Party C and its representatives contacted Daphne Dufresne, chairperson of the Board, and requested a conference call with Ms. Dufresne and members of the Board who are neither employees nor employees of affiliates of SREP or RES. During the evening of August 9, 2021, Party C and its representatives held a conference call with directors Ms. Dufresne, Mr. Landry and Mr. Calahan, during which representatives of McGrath North were present, during which Party C’s representatives discussed a potential transaction whereby Party C, through a joint venture with another party, would acquire the Company for $300 million. Party C advised that it was still working with its legal counsel to develop a transaction structure that would permit stockholders, other than SREP or RES or their affiliates, to elect to receive cash or remain a stockholder of the Company. After consulting with the Board, and with an intent to encourage Party C to provide more details regarding its proposal, Mr. Blackham directed McGrath North to prepare a draft definitive agreement for consideration by Party C. Party C received such draft agreement from HWE on August 13, 2021, and to which Party C did not respond. Party C formally submitted its $300 million non-binding offer in the first round of requested offers on August 12, 2021, which was consistent with the prior discussions on August 9, 2021 without additional detail on transaction structure.

HWE called for offers from potential purchasers to be submitted on August 12, 2021. Eleven non-binding offers were received with purchase prices ranging from $285 million to $305 million. The non-binding offers

were as follows: Party B, $305 million; Party C, $300 million; Party D $300 million; Party E, $300 million; Party F, $298 million; Party G, $296 million; Party H, $288 million; Party I, $286.5 million; Party J, $285 million; Party K, $285 million; and Buyer, $295 million. Blackstone’s non-binding offer additionally contemplated the deposit of $8.5 million into escrow within two business days after the execution of the Purchase Agreement.

On August 16, 2021, the Board held a special meeting by video teleconference with representatives of McGrath North present. The Board was provided an offer matrix prepared by HWE which summarized, for each of the eleven parties who submitted non-binding offers, their proposed purchase price, earnest money deposit, due diligence period and closing timing. HWE had prior transaction experience with all parties, except Party F. The Board discussed the eleven non-binding offers and Mr. Blackham, on HWE’s recommendation, recommended a request for a second round of offers with the seven parties, Blackstone and Parties B, C, D, E, F and G, who had previously submitted non-binding offers of $295 million or more. After further discussion, the Board by unanimous decision directed that a second round of offers be requested from the seven parties for their best and final bids of $300 million or more, along with additional instructions that the offers include no more than a 30 day due diligence period and at least a 5% earnest money deposit of the purchase price at the time of signing a purchase agreement.

On August 16, 2021, HWE advised Blackstone and Parties B, C, D, E, F and G to submit best and final offers on August 20, 2021. On August 20, 2021, HWE received non-binding offers from the six parties ranging from $297 million to $308 million. The offers submitted were Party B, $305 million; Party E, $308 million; Party F, $300 million; Party G, $297 million; Party H, $298 million; and Blackstone, $307 million with a deposit of $15 million. Party C did not participate in the second round of offers on August 20, 2021.

On August 23, 2021, the Board met by video teleconference to review the six non-binding offers received on August 20, 2021. The Board was provided with an updated offer matrix prepared by HWE regarding the second-round non-binding offers from the six parties. The offer matrix included each of the parties’ estimate of the costs of the property improvement program (“PIP”) that would be required by the hotel franchisors upon transfer of the Portfolio. The PIP estimates ranged from $25 million to $38 million and were estimated costs that the potential purchaser would incur upon purchase of the Portfolio. The directors discussed the sophistication and experience of the parties and concluded that Blackstone had indicated substantial interest given its purchase price offer increase between it first and second round non-binding offers, and presented a compelling offer without any financing contingencies. As a result, the Board concluded that Blackstone had the greatest potential to enter into and consummate a transaction on the most favorable terms reasonably available to the Company. Party E, though the highest cash offer, had advised that it would require financing to move forward with a transaction. After further discussion, the Board authorized Mr. Blackham to provide Blackstone with exclusivity for due diligence purposes through September 20, 2021, and to proceed with negotiations of a hotel purchase and sale agreement with Blackstone.

Between August 23, 2021 and September 22, 2021, the Company’s management and representatives of Blackstone and their respective counsel engaged in negotiations regarding the Portfolio Sale.

On August 23, 2021, the Company provided Blackstone a draft access and confidentiality agreement. Between August 23, 2021 and August 26, 2021, the Company’s management and representatives of Blackstone and their respective counsel engaged in negotiations regarding the access and confidentiality agreement. On August 26, 2021, Blackstone and the Company entered into an access and confidentiality agreement providing for the inspection of the Portfolio prior to reaching a binding hotel purchase and sale agreement. Blackstone was provided an exclusivity period until September 2, 2021 during which the Company would exclusively negotiate and discuss with Blackstone the sale of the Portfolio. The exclusivity period was to terminate on September 2, 2021 if Blackstone did not provide comments to the draft hotel purchase and sale agreement to Jeffer Mangels by September 2, 2021.

On September 2, 2021, Blackstone’s counsel, Simpson Thacher & Bartlett LLP (“Simpson Thacher”) submitted comments to the draft hotel purchase and sale agreement to Jeffer Mangels which included, among other matters, additional Company representation, warranties and covenants, revisions to the non-solicitation covenant, revisions to the termination events and related fees and expense reimbursements in the event the

agreement is terminated in certain circumstances, and revisions related to the Company’s post-closing indemnification obligations. Since Simpson Thacher provided comments to the draft agreement on behalf of Blackstone on September 2, 2021 within the required timeframe as described above, the exclusivity period automatically continued to September 17, 2021.

On September 7, 2021, Jeffer Mangels provided a revised draft of the hotel purchase and sale agreement to Simpson Thacher, including comments, among other things, on the timing of a deposit of the $15 million in escrow by the Buyer, the Company’s obligations and limitations regarding the conduct of its business pending the closing of the Portfolio Sale, Buyer’s acknowledgment with respect to satisfaction of due diligence, the Company’s non-solicitation obligations, the Company’s obligations with respect to franchise agreements for the Portfolio, termination rights, the Company’s aggregate liability limitation, the survival period of Company’s representations, warranties and covenants and revisions of certain material definitions. Jeffer Mangels also identified for Simpson Thacher the following key issues warranting particular ongoing discussion: Blackstone’s assumption of the hotel management agreements; Blackstone’s responsibility to obtain assignment of, or a new franchise agreement for, each of the hotels; the Company’s termination fee in the amount of $5 million if the Company accepts a superior offer and terminates the Purchase Agreement in accordance with its terms; a limit on the Company’s post-closing liability; and the survival of the Company’s representations and warranties.

On September 10, 2021, the Company engaged KeyBanc Markets Inc. (“KeyBanc”) to provide an opinion as to the consideration to be received by the Company for the sale of its hotel assets. As consideration for KeyBanc’s services, the Company agreed to pay KeyBanc a $600,000 fee upon rendering its opinion, irrespective of any conclusion expressed in the opinion.

On September 13, 2021, Simpson Thacher provided Jeffer Mangels with a revised draft of the hotel purchase and sale agreement which included a requirement for principal stockholders of the Company to enter into voting agreements to approve the transaction, a change in the transaction structure so that Buyer would acquire the Company’s hotel-owning subsidiaries rather than the hotels directly, additional representations, warranties and covenants related to such subsidiaries and tax matters in light of the revised transaction structure, revisions to Company’s non-solicitation obligations, expense reimbursements, Buyer’s obligations with respect to franchise agreements and the survival of the Company’s representations and warranties.

On September 13, 2021, McGrath North provided an initial draft of a form of a voting agreement to Simpson Thacher with a request for review and comments which were then further distributed to Mr. Blackham, RES and SREP for review and comment. The parties to the voting agreements subsequently negotiated and finalized the terms of the voting agreement on September 22, 2021, including the events in which Mr. Blackham, RES and SREP could change or withdraw their support.

Thereafter and until the execution and delivery of the Purchase Agreement on September 22, 2021, the parties continued to negotiate the terms of the Purchase Agreement, including with respect to the timing of the Buyer’s $15 million deposit, the Company’s obligations with respect to franchise agreements, the circumstances in which the Company would be required to provide an expense reimbursement to Blackstone, the Company’s ability to participate in discussions or negotiations with third parties relating to unsolicited acquisition proposals, the right of the Board to change its recommendation that stockholders approve the Portfolio Sale Proposal in response to a superior proposal or otherwise, the Company’s right to terminate the Purchase Agreement to accept a superior proposal under certain conditions, the other termination provisions and the triggers of the termination fee payable by the Company, the limit of the Company’s aggregate liability with respect to Company’s representations, warranties, obligations, covenants and agreements.

On September 15, 2021, a video teleconference was held with seven members of the board of directors, with Daphne Dufresne and Drew Iadanza unable to attend, at which Mr. Blackham, Jeffer Mangels and McGrath presented a summary of the current negotiations with Buyer and the terms and provisions of the draft hotel purchase and sale agreement. Directors asked questions of and received responses from Mr. Blackham, Jeffer Mangels and McGrath North, with respect to terms and provisions, including termination events, termination fees and the plan of liquidation.

On September 16, 2021, a similar video teleconference was held with Daphne Dufresne, chairperson of the Board, with Mr. Blackham, and representatives of Jeffer Mangels and McGrath North present and providing information on the draft hotel purchase and sale agreement and plan of liquidation, and responses to Ms. Dufresne’s questions.

On September 19, 2021, Mr. Trebilco, a Managing Director of Blackstone, communicated to HWE and to Mr. Blackham that, upon conducting further due diligence, Blackstone’s anticipated costs for a property improvement plan and deferred maintenance were an additional $4 million and $1.3 million, respectively. Mr. Trebilco advised the representatives of HWE and Mr. Blackham that, in order to proceed with the transaction, Blackstone required a reasonable contribution by Company with respect to these additional costs by a reduction of the purchase price of $2 million.

On September 20, 2021, the Board held a video telephonic meeting at which representatives of KeyBanc, Jeffer Mangels, and McGrath North were present. The representatives of KeyBanc reviewed its financial analysis of the consideration to be paid to the Company in the Portfolio Sale with the board of directors. A representative of KeyBanc then delivered to the board of directors an oral opinion, which was subsequently confirmed by delivery of a written opinion dated September 21, 2021, to the effect that as of such date, and subject to the assumptions, limitations, qualifications and other matters set forth in KeyBanc’s written opinion, the consideration to be paid to the Company in the Portfolio Sale was fair, from a financial point of view, to the Company. The Board discussed the fairness opinion with the representatives of KeyBanc. Management and Jeffer Mangels reviewed the material terms of the Purchase Agreement with the Board. Representatives of McGrath North also reviewed with the Board the duties owed by the directors under the MGCL in connection with the Portfolio Sale and the Plan of Liquidation. Discussions ensued regarding the reduction of the purchase price to $305 million, which the Board unanimously agreed with, and among other items, the strategic alternative process, the Plan of Liquidation and the estimated range of liquidation distributions of $7.35 to $7.85 per share of Company common stock, and the Board’s belief that the Portfolio Sale would be completed based on, among other things, the proven ability of Blackstone to complete large acquisition transactions on the agreed terms, Blackstone’s extensive experience in the real estate industry, and the lack of a financing condition. McGrath North then presented a proposed amendment to the Company’s bylaws that set forth the exclusive forums for certain litigation. McGrath North then reviewed the proposed resolutions prepared for the Portfolio Sale, the Plan of Liquidation and the bylaw amendment. Following further deliberation and discussion by the Board regarding the Purchase Agreement, the Plan of Liquidation and the estimated range of liquidating distributions, and consideration of the business, financial and other factors set forth under “Reasons for the for the Portfolio Sale and Plan of Liquidation and Recommendation of our Board of Directors”, including the Board’s belief that the Portfolio Sale and the Plan of Liquidation are more favorable to our stockholders than other strategic alternatives available to the Company, including remaining as an independent entity, the Board, by unanimous vote of all directors, (i) declared the transactions contemplated by the Purchase Agreement, including the Portfolio Sale, advisable in the best interests of the Company and its stockholders, approved the Purchase Agreement, and unanimously recommended that the Portfolio Sale Proposal be submitted to the holders of the Company common stock for approval, and (ii) declared the Plan of Liquidation fair, advisable and in the best interest of the Company and its stockholders, approved the Plan of Liquidation and unanimously recommended that the Liquidation Proposal be submitted to the holders of the Company common stock for approval.

Throughout the day and evening of September 22, 2021, Mr. Blackham, Mr. Trebilco, Simpson Thacher, Jeffer Mangels and McGrath North continued to discuss and finalize the terms of the Purchase Agreement. The parties executed and delivered the Purchase Agreement and the voting agreements late in the evening of September 22, 2021.

On the morning of September 23, 2021, the Company issued a press release announcing that the Buyer and the Company had entered into the Purchase Agreement and the Company had adopted the Plan of Liquidation. Subsequently, on September 23, 2021, the Company filed its Current Report on Form 8-K to report the events and included as exhibits thereto the Purchase Agreement, Plan of Liquidation, bylaw amendment, the form of the voting agreement, and a copy of the press release.

In evaluating the Purchase Agreement and the other transactions contemplated by the Purchase Agreement, and the Plan of Liquidation, our Board consulted with the Company’s management and legal and financial advisors. In reaching its determination that the Purchase Agreement and the transactions contemplated by the Purchase Agreement, including, without limitation, the Portfolio Sale, and the Plan of Liquidation, are each fair, advisable and in the best interest of the Company and our stockholders, our Board considered a number of factors, including the following material factors which our Board viewed as supporting its decision to adopt and approve each of the Purchase Agreement and the Plan of Liquidation, and for our Board to recommend approval of the Portfolio Sale Proposal and the Liquidation Proposal to our stockholders:

The board of directors also considered a variety of risks and other potentially negative factors in its consideration of the Purchase Agreement and the Plan of Liquidation, including the following material factors:

The foregoing discussion of the factors considered by our board of directors is not intended to be exhaustive and is not provided in any specific order or ranking, but rather includes the material factors considered by our board of directors. In reaching the decision to adopt and approve each of the Purchase Agreement and the Plan of Liquidation, the board did not quantify, rank or otherwise assign any relative weights to, and did not make specific assessments of, the factors considered, and individual directors may have given different weights to different factors.

The explanation of the factors and reasoning set forth above contain forward-looking statements and should be read in conjunction with the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements.” After considering the foregoing potentially negative and potentially positive factors, our board of directors concluded that the potentially positive factors relating to each of the Purchase Agreement and the Plan of Liquidation, substantially outweighed the potentially negative factors.

After careful consideration, for the reasons set forth above, the board unanimously (i) determined that the Purchase Agreement and the transactions contemplated thereby, including, without limitation, the Portfolio Sale, are fair to, advisable and in the best interest of the Company and the stockholders, (ii) adopted and approved the Purchase Agreement, (iii) determined that the Plan of Liquidation is fair, advisable and in the best interests of the Company and the stockholders and (iv) recommends that you vote “FOR” the approval of the Portfolio Sale Proposal and the Liquidation Proposal.

The Company board of directors retained KeyBanc solely to provide an opinion as to the fairness of the cash consideration to be received by the Company in connection with the Portfolio Sale. In selecting KeyBanc,

the Company board of directors considered, among other things, KeyBanc’s qualifications, expertise, reputation and knowledge of the business and affairs of the Company and the industry in which the Company operates.

On September 20, 2021, KeyBanc rendered an oral opinion to the Company board of directors, which was subsequently confirmed in a written opinion as of September 20, 2021, to the effect that, as of such date and based upon and subject to the assumptions made, matters considered and limitations and qualifications upon the review undertaken by KeyBanc, of the cash consideration to be received by the Company pursuant to the Purchase Agreement was fair, from a financial point of view, to the Company. KeyBanc’s opinion does not address any other terms, conditions, aspects or implications of the Portfolio Sale or the distribution or utilization of the cash consideration to be received by the Company in the Portfolio Sale.

The full text of KeyBanc’s written opinion, dated September 20, 2021, is attached to this proxy statement as Appendix C. You should read KeyBanc’s opinion carefully and in its entirety for a discussion of, among other things, the scope of the review undertaken and the assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken by KeyBanc in connection with its opinion. This summary is qualified in its entirety by reference to the full text of the opinion. KeyBanc’s opinion was prepared for the benefit and use of the Company board of directors (in its capacity as such), and addressed only the fairness from a financial point of view, as of the date of the opinion, of the cash consideration to be received by the Company pursuant to the Purchase Agreement. KeyBanc was retained solely to provide such opinion. KeyBanc’s opinion does not constitute a recommendation as to how any stockholder should vote with respect to the Portfolio Sale or any other matter, and does not address any other terms, conditions, aspects or implications of the Portfolio Sale or the distribution or utilization of the cash consideration to be received by the Company in the Portfolio Sale.

In connection with rendering its opinion, KeyBanc, among other things:

In its review and analysis and in arriving at its opinion, KeyBanc assumed and relied upon the accuracy and completeness of all of the financial and other information that was publicly available or otherwise provided to or reviewed by KeyBanc (including information relied upon or reviewed at the direction of the management of the Company, and including certain financial forecasts prepared by our management that formed a substantial basis for the fairness opinion) and further relied upon the assurances of our management that they were not aware of any facts or circumstances that would make such information inaccurate or misleading in any material respect. KeyBanc also assumed that the representations and warranties of each of the parties to the Purchase Agreement were and will be true and correct in all respects material to its analysis. KeyBanc was not engaged to, and has not independently attempted to, verify any of such information or its accuracy or completeness. KeyBanc also

relied upon our management as to the reasonableness and achievability of the financial forecast (and the assumptions and bases therefor) provided to KeyBanc and, with our consent, KeyBanc assumed that such forecast was reasonably prepared on bases that reflected the best available estimates and judgments of our management of the future financial performance of the Portfolio and other matters covered thereby. KeyBanc was not engaged to assess the reasonableness or achievability of such forecast or the assumptions on which it was based, and KeyBanc expresses no view as to such forecast or assumptions. In addition, KeyBanc has not conducted a physical inspection, valuation or appraisal of the Portfolio or liabilities related to the Portfolio. KeyBanc is also not expressing any view or opinion with respect to, and, at our direction, KeyBanc relied upon, the assessments of our representatives regarding legal, regulatory, accounting, tax and similar matters relating to the Company and the Portfolio Sale, as to which matters KeyBanc understands that we obtained such advice as we deemed necessary from qualified advisors and professionals. KeyBanc also assumed that all governmental, regulatory or other consents, releases and approvals necessary for the consummation of the Portfolio Sale will be obtained without any adverse effect on the Company, Buyer or the Portfolio Sale that would be meaningful to its analysis.

KeyBanc was not asked to, nor did it, offer any opinion as to the material terms of the Purchase Agreement, any other agreement entered into in connection with the Portfolio Sale or any other terms, conditions, aspects or implications of the Portfolio Sale or the distribution or utilization of the cash consideration to be received by the Company in connection with the Portfolio Sale. In rendering its opinion, KeyBanc, with the consent of the Company board of directors, assumed that the final executed form of the Purchase Agreement would not differ in any material respect from the draft that KeyBanc examined, and that the conditions set forth in the Purchase Agreement would be satisfied and that the Portfolio Sale would be consummated on a timely basis on the terms set forth in the Purchase Agreement without waiver, modification or amendment of any term or condition that would be meaningful to KeyBanc’s analysis.

KeyBanc’s opinion is based on economic and market conditions and other circumstances existing on, and information made available to KeyBanc as of, the date of its opinion and does not address any matters subsequent to such date. In addition, KeyBanc’s opinion is, in any event, limited to the fairness, as of the date of its opinion, from a financial point of view, of the cash consideration to be received by the Company pursuant to the Purchase Agreement and does not address our underlying business decision to engage in the Portfolio Sale or any other terms of the Portfolio Sale or the distribution or utilization of the cash consideration to be received by Company in connection with the Portfolio Sale. In addition, KeyBanc does not express any opinion as to (i) the fairness of the Portfolio Sale or (ii) the amount or the nature of the compensation now paid or to be paid, in each case, to any of our directors, officers or employees, or class of such persons as a result of or in connection with the Portfolio Sale. KeyBanc has not evaluated nor does it express any opinion on the solvency or viability of the parties to the Purchase Agreement or their respective affiliates or the ability of such parties to pay their respective obligations when they come due. It should be noted that although subsequent developments may affect KeyBanc’s opinion, KeyBanc does not have any obligation to update, revise or reaffirm its opinion. KeyBanc’s opinion was approved by a fairness committee of KeyBanc.

KeyBanc’s opinion does not constitute a recommendation as to any action the Company board of directors should take in connection with the Portfolio Sale or the other transactions contemplated by the Purchase Agreement or any aspect thereof and is not a recommendation to any director of the Company, any security holder or other party on how that person should act or vote with respect to the Portfolio Sale or any other matter.

The summary set forth below does not purport to be a complete description of the financial analyses performed by KeyBanc, but describes, in summary form, the material elements of the presentation that KeyBanc made to the Company board of directors on September 20, 2021 in connection with KeyBanc’s opinion. The following is a summary of the material financial analyses performed by KeyBanc in arriving at its opinion.

KeyBanc’s opinion was only one of many factors considered by the Company board of directors in evaluating the proposed Portfolio Sale. Neither KeyBanc’s opinion nor its financial analyses were determinative of the cash consideration or of the views of the Company board of directors or our management with respect to the Portfolio Sale or the cash consideration to be received by the Company pursuant to the Purchase Agreement. None of the analyses performed by KeyBanc were necessarily assigned a greater significance by KeyBanc than any other, nor does the order of analyses described represent relative importance or weight given to those analyses by KeyBanc. The summary text describing each financial analysis does not constitute a complete description of KeyBanc’s financial analyses, including the methodologies and assumptions underlying the

analyses, and if viewed in isolation could create a misleading or incomplete view of the financial analyses performed by KeyBanc. The summary text set forth below does not represent and should not be viewed by anyone as constituting conclusions reached by KeyBanc with respect to any of the analyses performed by it in connection with its opinion. Rather, KeyBanc made its determination as to the fairness, from a financial point of view, of the cash consideration to be received by the Company pursuant to the Purchase Agreement on the basis of its experience and professional judgment after considering the results of all of the analyses performed. KeyBanc’s opinion does not address any other terms, conditions, aspects or implications of the Portfolio Sale or the distribution or utilization of the cash consideration to be received by the Company in the Portfolio Sale.

Except as otherwise noted, the information utilized by KeyBanc in its analyses, to the extent that it is based on market data, is based on market data as it existed on or before September 20, 2021 and is not necessarily indicative of current market conditions. The analyses described below do not purport to be indicative of actual future results, or to reflect the prices at which any securities may trade in the public markets, which may vary depending upon various factors, including changes in interest rates, dividend rates, market conditions, economic conditions, and other factors that influence the price of securities.

KeyBanc performed an analysis of selected comparable portfolio transactions in the hospitality industry that shared certain characteristics with the Portfolio Sale. Based on publicly available information and information from third-party data providers, including certain financial data and the purchase prices paid, KeyBanc identified the following 22 majority limited-service hotel portfolio transactions in excess of $100 million that were consummated during the period from October 2016 through July 2021 (the “Selected Portfolio Sale Comparables”).

For the Selected Portfolio Sale Comparables, KeyBanc (a) reviewed the purchase price, property information and $/key metrics of each transaction and (b) calculated the high, low, median and average purchase price, number of keys and $/key. All information that KeyBanc reviewed was based on publicly available information and information from third-party data providers. KeyBanc then applied the average and median financial metrics from the Selected Portfolio Sale Comparables to the Company’s respective metrics to determine a valuation range.

The following table sets forth the analysis to determine the high-end and low-end of the range of the Selected Portfolio Sale Comparables:

No company or transaction utilized as a comparison in the analysis of selected comparable transactions is identical to the Company or directly comparable to the Portfolio Sale, including in business mix, timing or size. Accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that would affect the value of the companies to which we are being compared. In evaluating the selected precedent portfolio transactions, KeyBanc made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters which are beyond our control, such as the impact of competition on the Company and the industry generally, industry growth and the absence of any adverse material change in our financial conditions and prospects or the hospitality industry or the financial markets in general.

KeyBanc reviewed and compared certain publicly available financial information and valuation multiples for comparable publicly traded companies focused on limited-service hotels, including publicly traded REITs, that KeyBanc believed, based on its professional judgment and experience, to be comparable to the Company for purposes of this analysis. Financial data of the selected companies were based on public filings and other publicly available information, such as SEC filings and third-party equity research reports. As used in this summary, (1) “Hotel EBITDA” refers to earnings from property-level hotel operations before interest, taxes, depreciation and amortization, adjusted to exclude nonrecurring and other similar items and one-time charges and (2) “EV” refers to aggregate enterprise value, calculated as equity value, plus book value of total debt, plus non-controlling interest (as appropriate for the company being analyzed), less cash, cash equivalents and marketable securities.

For each of these comparable companies, KeyBanc calculated the ratio of the comparable companies’ (a) EV to estimated calendar year 2022 (“2022E”) Hotel EBITDA to derive the low-end of the implied real estate value and (b) EV to actual calendar year 2019 (“2019A”) Hotel EBITDA to derive the high-end of the implied real estate value. KeyBanc focused on both 2022E and 2019A Hotel EBITDA multiples to reflect cash flow multiples that would in their view limit the impact of COVID-related restrictions as much as reasonably possible. The multiples for each of the selected companies were calculated using their respective closing prices on September 17, 2021.

This analysis indicated the following high-end and low-end implied real estate valuations, as compared to the cash consideration to be received by the Company in the Portfolio Sale:

No company utilized in the selected public companies analysis was identical to the Company. In particular, each of the selected publicly traded companies is meaningfully larger than the Company and has more liquidity in the stock. In evaluating selected public companies, KeyBanc made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters which are beyond our control, such as the impact of competition on us and the industry generally, industry growth, and the absence of any material adverse change in our financial condition and prospects or the lodging industry or the financial markets in general.

KeyBanc identified and analyzed transactions of hotel properties that KeyBanc believed, based on its professional judgment and experience, to be comparable to the Company’s Portfolio for purposes of this liquidation analysis. Property and financial data of the selected transactions were based on publicly available information or derived from third-party industry data providers.

KeyBanc identified and analyzed in excess of 400 individual property sales within the last five years to establish an average value per key for each property in the Portfolio. Each of the transactions reviewed were within the twelve distinct Metropolitan Statistical Areas in which the Company operates. KeyBanc further refined the analysis to focus on upper-midscale to upscale properties that more closely matched the type and quality of hotel property in the Company’s Portfolio and subsequently applied a 15% portfolio premium to the average of the selected transactions.

This analysis indicated the following high-end and low-end implied real estate valuations, which were calculated by applying a range of plus or minus 5.0% to the average of the selected comparables, as compared to the cash consideration to be received by the Company in the Portfolio Sale:

No limited-service hotel property utilized in this liquidation analysis was identical to any property in the Portfolio. Accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that would affect the value of the hotel properties to which the Portfolio is being compared. In evaluating the selected transactions, KeyBanc made judgments and assumptions with regard to certain industry metrics, categories of hotel properties and other matters which are beyond our control.

In order to estimate the present value of the cash consideration to be received by the Company in the Portfolio Sale, KeyBanc performed a discounted cash flow analysis of the Portfolio utilizing cash flow projections provided by the Company’s management.

To calculate the implied real estate value of the Portfolio using the discounted cash flow method, KeyBanc added the Company's (i) projected unlevered free cash flows for the Portfolio for fiscal years 2022 through 2026 based on the cash flow projections provided by the Company’s management to (ii) the “terminal value” for the Company’s Portfolio, and discounted such amounts to their respective present value using a range of selected discount rates. The unlevered free cash flows were calculated by taking Hotel EBITDA and subtracting capital

expenditures. The Company also directed KeyBanc to assume property improvement program costs of $12.5 million in each of 2022 and 2023. The residual value of the Portfolio at the end of the forecast period, or “terminal value,” was estimated by applying a range of plus or minus 5.0% to the average $ / key multiple of $165,891, which was based on the average of the Selected Portfolio Sale Comparables, and which was applied to the Portfolio key count. The unlevered free cash flows and the range of terminal values were then discounted to present value using a discount range of 9% to 11%, representing the weighted average cost of capital of the Company’s Portfolio, utilizing the capital asset pricing model based on KeyBanc’s professional judgement and experience.

This analysis indicated the following high-end and low-end implied real estate valuations, as compared to the cash consideration to be received by the Company in the Portfolio Sale:

This discounted cash flow analysis involved complex considerations and judgments by KeyBanc concerning differences in financial and operating characteristics and other factors that could affect the Portfolio Sale or other values of the companies, businesses or transactions to which the Company and the Portfolio Sale were compared. In undertaking the analysis, KeyBanc made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters which are beyond our control, such as the impact of competition on the Company and the industry generally, industry growth and the absence of any adverse material change in our financial conditions and prospects or the hospitality industry or the financial markets in general.

In connection with KeyBanc’s services as the financial advisor to the Company board of directors, pursuant to a letter agreement dated September 10, 2021, we paid KeyBanc a fee of $0.6 million which was payable upon KeyBanc’s delivery of its opinion. In addition, we have agreed to reimburse KeyBanc for its reasonable out-of-pocket expenses and to indemnify KeyBanc against certain liabilities that may arise in connection with KeyBanc’s engagement. The terms of the fee arrangement were negotiated at arm’s length between the Company and KeyBanc.

KeyBanc acted as a lead underwriter on a follow-on equity transaction priced by the Company in March 2017, for which KeyBanc received fees in the aggregate amount of approximately $0.8 million. In addition, KeyBanc acted as joint lead arranger and KeyBank National Association (“Key”), an affiliate of KeyBanc, acted as agent and lender in connection with the credit agreement entered into in March 2017 among the Operating Partnership as borrower and the other parties party thereto, for which KeyBanc and Key received fees in the aggregate amount of approximately $1.1 million. Furthermore, KeyBanc acted as sell-side advisor to the Company board of directors and provided a fairness opinion in connection with the proposed transaction with NexPoint Hospitality Trust, for which KeyBanc received fees in the aggregate amount of $1.7 million.

KeyBanc, as part of its investment banking business, is customarily engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, and private placements and valuations for estate, corporate and other purposes. In the ordinary course of KeyBanc’s businesses, KeyBanc and its affiliates, their employees and affiliates, and funds or other entities that such persons manage or invest in or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of the Company or Buyer or any of their respective affiliates and third parties, or any currency or commodity that may be involved in the Portfolio Sale, in each case for their own accounts or for the accounts of customers. KeyBanc and its affiliates may in the future provide financial advisory, commercial banking and/or underwriting services to the Company, Buyer or their respective affiliates for which they may receive compensation.

Due to, among other reasons, the uncertainty of the underlying assumptions and estimates inherent in preparing financial projections, we do not as a matter of course make public long-term projections as to future revenues, earnings or other results. However, in connection with the evaluation of a possible transaction, the Company’s management prepared and provided to our Board certain nonpublic, internal financial projections of our future operations for the Company for 2021 through 2026, which are summarized below. At the direction of our Board, the projected financial information was also provided to KeyBanc, our financial advisor, which was utilized in connection with its financial analyses described above under the section above entitled “-Opinion of our financial advisor”. These projections were also provided to those potential bidders in our strategic alternatives process who executed non-disclosure agreements, including the Buyer.

We have included the following financial projections for the purpose of providing stockholders access to certain nonpublic information that was furnished KeyBanc and to the potential bidders in our strategic alternatives process who executed non-disclosure agreements, and such information may not be appropriate for other purposes, and is not included to influence your decision to vote for the Portfolio Sale.

The financial projections were not prepared with a view toward public disclosure and, accordingly, do not necessarily comply with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or generally accepted accounting principles (“GAAP”). Neither our independent registered public accounting firm nor any other independent accountants has compiled, examined, audited, or performed any procedures with respect to the financial projections, and has not expressed any opinion or any other form of assurance regarding this information or its achievability. The summary of the prospective financial information is included in this proxy statement only because such information was made available to the Board, KeyBanc and Buyer. The inclusion of the financial projections in this proxy statement does not constitute an admission or representation by us that the information is material.

The above financial projections above were not prepared in accordance with GAAP. We use non-GAAP financial measures in analyzing our financial results and believe that they enhance investors' understanding of our financial performance and the comparability of our results to prior periods, as well as against the performance of other REITs. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The Company's calculation of non-GAAP financial measures may differ from others in the industry. Financial measures provided to a financial advisor are excluded from the definition of non-GAAP financial measures and therefore, are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Accordingly, we have not provided a reconciliation of the financial measures included in the financial projections above.

While presented with numeric specificity, these financial projections were based on numerous variables and assumptions that are inherently subjective and uncertain and are beyond the control of our management. Important factors that may affect actual results and cause these financial projections to not be achieved include, but are not limited to, risks and uncertainties relating to our business (including our ability to achieve goals, objectives and targets over applicable periods), industry performance, general business and economic conditions and other factors described in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” on page 21. These financial projections also reflect numerous variables, expectations and assumptions available at the time they were prepared that are subject to change. In addition, the financial projections cover multiple years, and such information by its nature becomes less predictive with each succeeding year. As a result, actual results may differ materially from those contained in these financial projections. Accordingly, there can be no assurance that the projected results summarized above will be realized.

The inclusion of a summary of these financial projections in this proxy statement should not be regarded as an indication that any of our officers, directors, affiliates, advisors or other representatives considered these financial projections to necessarily be predictive of actual future events, and these financial projections should not be relied upon as such nor should the information contained in these financial projections be considered appropriate for other purposes. None of our officers, directors, affiliates, advisors or other representatives can give you any assurance that actual results will not differ materially from these financial projections. We undertake no obligation to update or otherwise revise or reconcile these financial projections to reflect circumstances existing after the date these financial projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying these financial projections are shown to be in error.

We have not made and make no representation to the Buyer, any stockholder, in the Purchase Agreement or otherwise, concerning these financial projections or regarding our ultimate performance compared to the information contained in these financial projections or that the projected results will be achieved. We urge all stockholders to review our most recent SEC filings for a description of our reported financial results.

In light of the foregoing factors and the uncertainties inherent in the financial projections, the foregoing financial projections should only be evaluated in conjunction with the Company’s historical financial statements and other information contained in our public filings with the SEC, and our stockholders are cautioned not to place undue, if any, reliance on the financial projections.

The following is a summary of the material U.S. federal income tax consequences of the Plan of Liquidation and of distributions to stockholders pursuant to the plan, including the possible receipt by stockholders of interests in a liquidating trust. This summary is based on current law, is for general information only and is not tax advice. This summary is based on the Internal Revenue Code of 1986, as amended (the “Tax Code”), applicable Treasury Regulations, and administrative and judicial interpretations thereof, each as in effect as of the date hereof, all of which are subject to change or to different interpretations, possibly with retroactive effect. We have not requested, and do not plan to request, any rulings from the IRS, concerning our tax treatment or the tax treatment of the Plan of Liquidation, and the statements in this proxy statement are not binding on the IRS or any court. We can provide no assurance that the tax consequences contained in this discussion will not be challenged by the IRS, or if challenged, will be sustained by a court.

This summary does not address (i) U.S. federal taxes other than income taxes, (ii) state, local or non-U.S. taxes, or (iii) tax reporting requirements. This summary assumes that shares of our common stock are held as

capital assets within the meaning of Section 1221 of the Tax Code and does not address all aspects of taxation that may be relevant to particular holders in light of their personal investment or tax circumstances or to persons that are subject to special tax rules (such as holders of our equity that received those interests as compensation). In addition, this summary does not address the tax treatment of special classes of holders of our common stock, including, for example:

If any entity that is treated as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of its partners or members generally will depend upon the status of the partner or member and the activities of the entity. If you are a partner of a partnership or a member of a limited liability company or other entity which is classified as a partnership for U.S. federal income tax purposes and that entity is holding our common stock, you should consult your tax advisor. Moreover, each holder should consult its tax advisor regarding the U.S. federal income tax consequences to it of our liquidation in light of its own particular situation, as well as any consequences of the liquidation to such holder arising under the laws of any other taxing jurisdiction.

For purposes of this section, a “U.S. holder” means a beneficial owner of our common stock that is, for U.S. federal income tax purposes:

As used in this section, a “non-U.S. holder” means a beneficial owner of shares of our common stock that is not a U.S. holder or an entity treated as a partnership for U.S. federal income tax purposes.

THE U.S. FEDERAL INCOME TAX RULES APPLICABLE TO OUR LIQUIDATION, TO HOLDING AND DISPOSING OF OUR COMMON STOCK, AND TO RECEIVING AND HOLDING INTERESTS IN A LIQUIDATING TRUST ARE HIGHLY TECHNICAL AND COMPLEX. HOLDERS OF COMMON STOCK ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE LIQUIDATION, THE OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK AND THE DISTRIBUTION AND OWNERSHIP OF INTERESTS IN A LIQUIDATING TRUST, INCLUDING THE APPLICABILITY AND EFFECT OF U.S. FEDERAL, STATE, LOCAL AND NON-U. S. INCOME AND OTHER TAX LAWS, AND POTENTIAL CHANGES IN APPLICABLE TAX LAWS, IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES.

We believe that we have qualified and continue to qualify as a REIT under the Tax Code. As a REIT, we are generally entitled to receive a dividends paid deduction for dividends that we pay. In addition, we are also generally permitted a dividends paid deduction with respect to distributions pursuant to a Plan of Liquidation, including distributions to our stockholders of interests in a liquidating trust, provided that the Plan of Liquidation is completed within 24 months of its adoption. We anticipate that our liquidating distributions will exceed our taxable income recognized in each tax year following the adoption of the plan, and that the Plan of Liquidation will be completed within 24 months of its adoption. In that case, we will generally not be subject to U.S. federal income tax on any gain or other income recognized following the adoption of the plan, including any gain that we recognize upon a transfer of appreciated assets to a liquidating trust and the distribution of interests in the trust to our stockholders.

While we believe that the Plan of Liquidation will be considered to be adopted when our stockholders approve of the plan on the Effective Date, it is possible that the IRS could assert that the adoption of the Plan of Liquidation effectively commenced prior to the Effective Date with the sale, or agreement by us to sell, certain properties. If such an assertion were successful, we could be required to complete the Plan of Liquidation sooner than 24 months following the Effective Date, or otherwise distributions that we make pursuant to the Plan of Liquidation might not be deductible by us which might result in a loss by us of our tax qualification as a REIT or in our otherwise incurring income taxes.

In order to maintain our status as a REIT, we must, among other things, continue to satisfy various qualification requirements pursuant to the Tax Code, including requirements relating to the nature of our gross assets and income, the timing and amount of distributions, and the composition of our stockholders. If the liquidation is approved by our stockholders, we intend to carry out the liquidation in a manner that will allow us to continue to meet the requirements for qualification as a REIT until we have distributed all our assets to our stockholders, which may include the transfer of any remaining assets and liabilities to a liquidating trust. However, as a result of the liquidation or otherwise, circumstances may arise which could cause us to fail to qualify as a REIT. In addition, the Board could cause the Company to discontinue our status as a REIT at any time if the Board finds it to be in the best interests of our stockholders to do so. Should we lose our status as a REIT, either inadvertently or because the Board determines that such loss will be in the best interests of our stockholders, we would be taxable as a corporation for federal income tax purposes, including any applicable alternative minimum tax. In that case, we would be subject to federal income taxes at the corporate rate for the taxable year in which our qualification as a REIT terminates, and in any subsequent years, with respect to our income from operations and from sales and distributions of appreciated assets in connection with our Plan of Liquidation, and without any tax deduction for dividends that we pay.

So long as we continue to qualify as a REIT, any net gain from “prohibited transactions” will be subject to a 100% tax. In general, “prohibited transactions” are dealer sales (i.e., inventory-like sales of property held primarily for sale to customers in the ordinary course of the Company’s business).

The Tax Code sets forth a safe harbor for REITs that wish to sell property without risking the imposition of the 100% penalty tax. The principal requirements of the safe harbor are that: (i) the REIT must hold the applicable property for not less than two years for the production of rental income prior to its sale; (ii) the aggregate expenditures made by the REIT, or any partner of the REIT, during the two-year period preceding the date of sale which are includible in the basis of the property do not exceed 30% of the net selling price of the

property; and (iii) property sales by the REIT during the particular tax year satisfy at least one of the following thresholds: (a) not more than seven sales during the year (treating the sale of multiple properties to the same buyer in a single transaction, as a single sale for this purpose); (b) sales in the current year do not exceed 10% of the REIT’s assets as of the beginning of the year (as measured by either fair market value or tax basis); or (c) sales in the current year do not exceed 20% of the REIT’s assets as of the beginning of the year, and sales over a three-year period do not exceed, on average, 10% per annum of the REIT’s assets, in each case as measured by either fair market value or tax basis. If a particular transaction does not satisfy all of the requirements of the foregoing safe harbor, it will not necessarily be treated as a prohibited transaction. Rather, in that case, the determination as to whether it is considered to be a dealer sale, and therefore a prohibited transaction, will instead be based upon an analysis of all of the relevant facts and circumstances.

If we desire to sell a property pursuant to a transaction that does not satisfy the safe harbor, we could avoid the prohibited transaction tax if we hold and sell the property through a TRS. In that case, any gain would be taxable to the TRS at regular corporate income tax rates. We may decide to forego the use of a TRS in a transaction that does not meet the safe harbor based our own internal analysis, or on the advice our tax advisors that the disposition will not be subject to the prohibited transaction tax. In cases where a property disposition is not effected through a TRS, the IRS could assert that the disposition constitutes a prohibited transaction. If such an assertion were successful, all of the net gain from the sale of the property will be payable as a penalty tax which will have a negative impact on cash flow and the ability to make cash distributions.

As a REIT, the value of our ownership interests held in TRSs may not exceed 20% of the value of all of our assets at the end of any calendar quarter. If we determine it to be in our best interest to own a substantial number of our properties through one or more TRSs, then it is possible that the IRS could assert that the value of our interests in our TRSs exceeds 20% of the value of our total assets at the end of any calendar quarter and therefore causes us to fail to qualify as a REIT. Additionally, as a REIT, generally no more than 25% of our gross income with respect to any year may be from sources other than real estate. Distributions paid to us from a TRS are considered to be non-real estate income. Therefore, we could fail to qualify as a REIT if distributions from all of the Company’s TRSs, when aggregated with all other non-real estate income with respect to any one year, are more than 25% of the Company’s gross income with respect to such year.

Whether an asset is property held primarily for sale to customers in the ordinary course of a trade or business is a highly factual determination. We believe that all of our properties are held for investment and the production of rental income, and that none of the sales of our properties in anticipation of or in connection with the Plan of Liquidation will constitute a prohibited transaction. Accordingly, although the sale of our properties in anticipation of or in connection with the Plan of Liquidation likely will not satisfy the prohibited transaction safe harbor described above, we nevertheless believe based upon the facts and circumstances of such sale transactions that such sales should not be treated as prohibited transactions. Moreover, we have not utilized TRSs to enter into or effectuate any of the sales agreements or transactions to date in anticipation of or in connection with our Plan of Liquidation, and do not currently expect to utilize TRSs to enter into or effectuate any future sales transactions. There can be no assurance, however, that the IRS will not successfully assert that sales of our properties are prohibited transactions which are subject to the 100% tax.

In connection with the Plan of Liquidation, stockholders may receive one or more liquidating distributions. The amount of any distribution pursuant to the Plan of Liquidation will be applied first to reduce a stockholder’s tax basis in his shares of common stock, but not below zero. A stockholder’s tax basis in his shares of common stock will generally be equal to the stockholder’s cost of his shares, reduced by any prior distributions that were treated as reductions in basis rather than taxable dividends. To the extent that distributions pursuant to the Plan of Liquidation exceed a U.S. holder’s basis in his common stock, the excess will constitute taxable gain and be recognized in the year in which the distribution is received. If the total amount of liquidating distributions received by a U.S. holder is less than the tax basis of the shares, the U.S. Holder will generally recognize a loss in the year in which the final liquidating distribution is received.

Gain or loss will be calculated separately for each block of shares of stock, with a block consisting of shares acquired at the same cost in a single transaction. This gain or loss will generally be capital gain or loss and will be long-term capital gain or loss if the stock has been held for more than one year. An individual U.S. holder will be subject to tax on net capital gain at a maximum U.S. federal income tax rate of 20%. Additionally,

a 3.8% Medicare tax will apply to any gain recognized by individuals, trusts and estates whose income exceeds certain threshold levels. Capital gains of corporate U.S. holders generally are taxable at the regular tax rates applicable to corporations (generally, 21% under current law). The deductibility of a capital loss recognized in connection with the Plan of Liquidation is subject to limitations under the Tax Code.

General. The U.S. federal income tax consequences of the Plan of Liquidation to a non-U.S. holder will depend on various factors, including whether the receipt of liquidating distributions are treated as distributions from us to our stockholders that are attributable to gain from the sale of “United States real property interests” pursuant to the Foreign Investment in Real Property Tax Act (which we refer to in this proxy statement as “FIRPTA”). The IRS announced in Notice 2007-55 that it intends to (1) take the position that under current law a non-U.S. holder’s receipt of a liquidating distribution from a REIT is generally subject to tax under FIRPTA as a distribution to the extent attributable to gain from the sale of United States real property interests by the REIT, and (2) issue regulations clarifying this treatment. Although legislation effectively overriding Notice 2007-55 has previously been proposed, it is not possible to say whether or when any such legislation will be enacted. As a result, the following paragraphs provide alternative discussions of the tax consequences that would arise to the extent that the tax treatment set forth in Notice 2007-55 does or does not apply. Notwithstanding the discussion in the following paragraphs, we intend to take the position that distributions pursuant to our Plan of Liquidation will be subject to tax in accordance with Notice 2007-55 as described in more detail below. In general, the provisions governing the taxation of distributions by REITs can be less favorable to non-U.S. holders than the taxation of sales or exchanges of REIT stock by non-U.S. holders, and non-U.S. holders should consult their tax advisors regarding the application of these provisions.

Distribution of Gain from the Disposition of U.S. Real Property Interests. To the extent that the tax treatment set forth in Notice 2007-55 applies, and to the extent that liquidating distributions are attributable to gain from sales of our United States real property interests, then such amount will be treated as income effectively connected with a United States trade or business of the non-U.S. holder and generally will be subject to U.S. federal income tax on a net basis. A corporate non-U.S. holder also will be subject to the 30% branch profits tax (or such lower rate as may be specified by an applicable income tax treaty). In addition, 21% (or 20% to the extent provided in Treasury Regulations) of any such amounts paid to a non-U.S. holder will be withheld and remitted to the IRS. Notwithstanding the foregoing, to the extent the tax treatment set forth in Notice 2007-55 does not apply, then the 21% withholding tax described above would also not apply, and such non-U.S. holder would instead be subject to the rules described below under “—Taxable Sale of our Common Stock”. We intend to withhold U.S. federal income tax at a rate of 21% (or 20% to the extent provided in applicable Treasury Regulations) from liquidating distributions paid to a non-U.S. holder to the extent required by Notice 2007-55.

Taxable Sale of our Common Stock. Subject to the discussion below of backup withholding and above with respect to distribution of gain from the disposition of United States real property interests, if Notice 2007-55 does not apply (for example, because a non-U.S. holder sells shares of common stock rather than receiving distributions pursuant to the Plan of Liquidation, or because Notice 2007-55 is overturned), a non-U.S. holder generally will not be subject to U.S. federal income taxation on any resultant gain or loss unless: (1) the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States, or, if an applicable income tax treaty applies, the gain is attributable to a permanent establishment maintained by the non-U.S. holder in the United States; (2) the non-U.S. holder is an individual present in the United States for 183 days or more in the taxable year in which the sale occurs and certain other requirements are met; or (3) such shares of stock constitute a “United States real property interest” under FIRPTA (which we do not expect will be the case because, as described below, we believe that we are a domestically controlled REIT). However, as noted above, we intend to withhold U.S. federal income tax at a rate of 21% (or 20% to the extent provided in applicable Treasury Regulations) from liquidating distributions paid to a non-U.S. holder to the extent required by Notice 2007-55.

A non-U.S. holder whose gain is effectively connected with the conduct of a trade or business in the United States will generally be subject to U.S. federal income tax on such gain on a net basis (i.e., net of any available expense deductions) in the same manner as a U.S. holder. In addition, a non-U.S. holder that is a corporation may be subject to the 30% branch profits tax on any such effectively connected gain.

A non-U.S. holder who is an individual present in the United States for 183 days or more in the taxable year in which the sale occurs and who meets certain other requirements will be subject to a flat 30% tax on the gain, which may be offset by United States source capital losses. In addition, the non-U.S. holder may be subject to applicable alternative minimum taxes.

If a non-U.S. holder’s stock constitutes a United States real property interest under FIRPTA, any gain recognized by such holder from a sale of the stock will be treated as income effectively connected with a United States trade or business of the non-U.S. holder and generally will be subject to U.S. federal income tax on a net basis in the same manner as a U.S. holder. A non-U.S. holder’s shares of common stock generally will not constitute a U.S. real property interest if we are a “domestically controlled qualified investment entity” at the time of the sale. A “qualified investment entity” includes a REIT. Assuming that we continue to qualify as a REIT, we will be a “domestically controlled qualified investment entity” if non-U.S. holders in the aggregate hold, directly and indirectly, less than 50% of the value of our common stock at all times during the five-year period ending with the sale. We believe that we currently are, and are likely to continue to be a domestically controlled REIT. However, no assurance can be given that the actual ownership of our stock has been or will be such that we qualify as a “domestically controlled qualified investment entity” at all times.

Income Tax Treaties. If a non-U.S. holder is eligible for treaty benefits under an income tax treaty with the United States, the non-U.S. holder may be able to reduce or eliminate certain of the U.S. federal income tax consequences discussed above, such as the branch profits tax. Non-U.S. holders should consult their tax advisor regarding possible benefits under an applicable income tax treaty.

U.S. Withholding Tax. As described above, we intend to withhold, pursuant to FIRPTA, U.S. federal income tax at a rate of 21% (or 20% to the extent provided in applicable Treasury Regulations) from liquidating distributions paid to a non-U.S. holder to the extent attributable to gains that we recognize from sales of United States real property interests.

A non-U.S. holder may be entitled to a refund or credit against the holder’s U.S. federal income tax liability, if any, with respect to any amount withheld pursuant to FIRPTA, provided that the required information is furnished to the IRS on a timely basis. Non-U.S. holders should consult their tax advisor regarding withholding tax considerations.

Backup withholding, currently at a rate of 24%, and information reporting may apply to distributions pursuant to the Plan of Liquidation. Backup withholding will not apply, however, to a holder who:

Backup withholding is not an additional tax and any amount withheld under these rules may be credited against the holder’s U.S. federal income tax liability and may entitle the holder to a refund if required information is timely furnished to the IRS.

The Foreign Account Tax Compliance Act (which we refer to in this proxy statement as “FATCA”) provides that a 30% withholding tax will be imposed on certain payments (including dividends as well as gross proceeds from sales of stock) made to a foreign financial institution (as specifically defined in the Tax Code) and certain other foreign entities if such entity fails to satisfy certain disclosure and reporting rules. Unless an exemption applies, FATCA generally requires that (i) in the case of a foreign financial institution, the entity identifies and provides information in respect of financial accounts with such entity held (directly or indirectly) by U.S. persons and U.S.-owned foreign entities and (ii) in the case of a non-financial foreign entity, the entity identifies and provides information in respect of substantial U.S. owners of such entity. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in clause (i) above, it must enter into an agreement with the U.S. Treasury requiring, among other things, that it undertake to identify accounts held by

certain U.S. persons or U.S.-owned foreign entities, annually report certain information about such accounts, and withhold 30% on payments to non-compliant foreign financial institutions and certain other account holders.

Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends on our common stock. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other disposition of stock on or after January 1, 2019, proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely, Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued. Non-U.S. holders are encouraged to consult with their tax advisors regarding the potential application and impact of FATCA and any intergovernmental agreement between the United States and their home jurisdiction in connection with FATCA compliance, with respect to dividends and liquidating distributions received from the Company.

If we do not believe that we can otherwise complete the Plan of Liquidation within 24 months of the Effective Date, or we believe it is otherwise advisable, the Board may at any time transfer our remaining assets and obligations to a liquidating trust. Under the Tax Code, a trust will be treated as a liquidating trust if it is organized for the primary purpose of liquidating and distributing the assets transferred to it, and if its activities are all reasonably necessary to and consistent with the accomplishment of that purpose. However, if the liquidation is prolonged or if the liquidation purpose becomes so obscured by business activities that the declared purpose of the liquidation can be said to be lost or abandoned, it will no longer be considered a liquidating trust. Although neither the Tax Code nor the Treasury Regulations thereunder provide any specific guidance as to the length of time a liquidating trust may last, the IRS’s guidelines for issuing rulings with respect to liquidating trust status call for a term not to exceed three years, which period may be extended to cover the collection of installment obligations.

Consequences to Holders—General. If we transfer assets to a liquidating trust and distribute interests in the liquidating trust to our stockholders, this will be treated for U.S. federal income tax purposes as if we distributed an interest in each of the assets so transferred directly to our stockholders. Accordingly, each holder will be treated as receiving a liquidating distribution from us equal to such holder’s share of the cash and the fair market value of the assets (less liabilities) transferred to the trust, and may recognize gain, and incur tax liability, if the cash and the fair market value of the non-cash assets (less liabilities) deemed distributed to that holder exceeds the holder’s basis in its shares, even though the holder may not receive a current distribution of such cash or other assets

Assuming that the liquidating trust is treated as a “liquidating trust” for U.S. federal income tax purposes, the liquidating trust will be treated as a “grantor trust” for U.S. federal income tax purposes. Accordingly, each unit or interest in the liquidating trust will represent ownership of an undivided proportionate interest in all of the assets and liabilities of the liquidating trust and a holder will be treated for U.S. federal income tax purposes as receiving or paying directly a pro rata portion of all income, gain, loss, deduction and credit of the liquidating trust. A holder will be taxed each year on its share of revenues from the liquidating trust, net of such holder’s share of deductible expenses of the liquidating trust (which may include interest and depreciation) whether or not the holder receives a distribution of cash from the liquidating trust that year. Holders may not be permitted to deduct their share of certain expenses incurred by the liquidating trust. When the liquidating trust makes distributions to holders, the holders will recognize no additional gain or loss.

A holder’s tax basis in a unit of the liquidating trust (and indirectly in the pro rata portion of the net assets in the liquidating trust which are attributable to that unit) will be equal to the fair market value of a unit (and those net assets) on the date that it is distributed to the holder, which value will be determined by us and reported to the holders. The long-term or short-term character of any capital gain or loss recognized in connection with the sale of the liquidating trust’s assets will be determined based upon a holding period commencing at the time of the acquisition by a holder of such holder’s beneficial interest in the liquidating trust.

The trustee or trustees of the liquidating trust will provide to each holder of units in the trust after each year end a detailed itemized statement that reports on a per unit basis the holder’s allocable share of all the various categories of revenue and expense of the liquidating trust for the year. Each holder must report such items on its own U.S. federal income tax return regardless of whether the liquidating trust makes current cash distributions.

If the liquidating trust fails to qualify as a liquidating trust for U.S. federal income tax purposes, the consequences to holders will depend on the reason for the failure to qualify, and, under certain circumstances, the liquidating trust could be treated as an association taxable as a corporation for U.S. federal income tax purposes, rather than as a trust. If the liquidating trust is taxable as a corporation, the trust itself will be subject to federal income tax at the applicable corporate income tax rate, which is currently 21%. In that case, distributions made by the trust would be reduced by this additional level of tax, and a holder would be subject to tax upon the receipt of distributions that constitute dividends from the trust rather than taking into account its share of the trust’s taxable items on an annual basis. We intend to take all available steps to cause the liquidating trust to qualify for treatment as a liquidating trust for U.S. federal income tax purposes.

Consequences to U.S. Tax-Exempt Holders. Tax-exempt investors, such as qualified accounts or IRAs, generally are exempt from federal income taxation. Such investors, however, may be subject to taxation on their unrelated business taxable income, or UBTI, that they recognize in a taxable year if that UBTI exceeds $1,000 for the taxable year. Although rents, gains and losses from the sale of property generally are excluded from UBTI, in the case of leveraged property, these exclusions are subject to limitations. To the extent a U.S. tax-exempt investor derives income from “debt-financed property” used in an unrelated trade or business, a portion of such income may be treated as UBTI. Debt-financed property is generally any property that is held by a tax-exempt investor to produce income and with respect to which there is acquisition indebtedness. Acquisition indebtedness includes indebtedness incurred (i) in acquiring or improving a property, (ii) before the acquisition or improvement of a property if the indebtedness would not have been incurred but for such acquisition or improvement, or (iii) after the acquisition or improvement of a property if the indebtedness would not have been incurred but for such acquisition or improvement and the indebtedness was reasonably foreseeable at the time of such acquisition or improvement. If we distribute interests in a liquidating trust to our stockholders, the liquidating trust may have debt that would be treated as acquisition indebtedness and give rise to debt financed income, and therefore UBTI, for IRAs and other tax-exempt investors.

State and Local Tax. Holders may be required to file income tax returns in states or localities in which a liquidating trust owns properties. The state or local tax treatment may differ from the U.S. federal income tax treatment described above. Each holder should consult its tax advisors regarding state and local tax consequences of owning units in a liquidating trust.

THE FOREGOING DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OF THE POTENTIAL TAX CONSIDERATIONS RELATING TO THE PLAN OF LIQUIDATION AND TO DISTRIBUTIONS MADE PURSUANT TO THE PLAN, AND IS NOT TAX ADVICE. THEREFORE, HOLDERS OF OUR COMMON STOCK ARE STRONGLY URGED TO CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OWNERSHIP OF OUR COMMON STOCK AND OF THE ADOPTION AND IMPLEMENTATION OF A PLAN OF LIQUIDATION, INCLUDING THE APPLICABILITY AND EFFECT OF U.S. FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS IN THEIR PARTICULAR CIRCUMSTANCES.

In connection with the entry into the Purchase Agreement, each of RES, SREP and certain of its affiliates and Mr. Blackham have entered into voting agreements with Buyer, dated as of September 22, 2021, pursuant to which, among other things, they agreed to vote all shares of Company common stock held by them and their affiliates:

Each of the voting agreements terminates upon the earlier of (i) the closing of the Portfolio Sale, (ii) such date and time as the Purchase Agreement shall be terminated in accordance with its terms, (iii) such date and time as there occurs any amendment, modification, waiver by the Company or other change to any provision of the Purchase Agreement as in effect on the date of the voting agreement which is effected without the consent of the stockholder that (A) expressly reduces the amount or changes the form of consideration payable to the Company, (B) extends the End Date (as defined in the Purchase Agreement) or (C) imposes any material restriction or additional material condition on the consummation of the Portfolio Sale or payment of the purchase price or otherwise, in each case, in a manner material and adverse to the stockholder or (iv) the termination of the voting agreement upon written notice of termination from the Buyer to the stockholder.

As of the Record Date, RES have shared voting and shared dispositive power over 4,754,198 shares of Company common stock, representing approximately 32.3% of the shares of our outstanding Company common stock.

As of the Record Date, SREP have shared voting and shared dispositive power over 4,185,933 shares of Company common stock, representing approximately 28.4% of our outstanding Company common stock.

As of the Record Date, Mr. Blackham, the Company’s President and Chief Executive Officer, has voting and dispositive power over 215,595 shares of Company common stock, representing approximately 1.5% of our outstanding Company common stock.

These stockholders collectively hold approximately 62.2% of the outstanding shares of Company common stock. However, upon the occurrence of an adverse recommendation change in compliance with the Purchase Agreement by our board of directors to its recommendation to stockholders of the Portfolio Sale, the aggregate number of shares covered by the voting obligations set forth in these voting agreements will automatically be reduced (on a pro rata basis with each other) to the extent necessary so that the aggregate number of shares of common stock subject to the voting agreements represents no more than 35% of the shares of common stock outstanding and entitled to vote at the special meeting.

Unless there occurs an adverse recommendation change or the termination of the voting agreements, the aggregate voting power of RES and SREP is sufficient to assure approval of the Portfolio Sale at the special meeting.

Each of RES, SREP and certain of its affiliates and Mr. Blackham also agreed not to sell, transfer, pledge or otherwise dispose of their shares that are subject to their respective voting agreements.

The foregoing description of the voting agreement does not purport to be complete and is qualified in its entirety by reference to the form of the voting agreement which is attached as Appendix D to this proxy statement.

In considering the recommendation of our board of directors with respect to the Portfolio Sale Proposal and the Liquidation Proposal, stockholders should be aware that our directors, executive officers and employees and certain stockholders have interests that may be different from, or in addition to, those of our stockholders generally. These interests may create potential conflicts of interest. Our board of directors were aware of these interests and considered them, among other matters, in reaching their respective decisions to adopt and approve the Purchase Agreement.

As of the Record Date, RES and SREP by virtue of their significant voting power and certain governance rights, each have the power to significantly influence our business and affairs and the outcome of matters required to be submitted to stockholders for approval, including the election of our directors, amendments to our charter, mergers or sales of assets. RES or SREP’s influence over our business and affairs may not be consistent with the interests of some or all of our stockholders.

Our board of directors consist of nine members, of which six were nominated for election to the board of directors pursuant to our agreements with RES and SREP entered into at the time of their investment in the Company. Three of the directors were designated for nomination by RES. These three directors are also employees of RES’s affiliates. Three of the directors were designated for nomination by SREP. Two of these directors are also employees of SREP affiliates.

As of the Record Date, RES and its affiliates have shared voting and shared dispositive power over 4,754,198 shares of common stock, representing approximately 32.3% of the shares of our outstanding common stock.

As of the Record Date, SREP and its affiliates have shared voting and shared dispositive power over 4,185,933 shares of common stock, representing approximately 28.4% of our outstanding common stock.

On November 19, 2020, the Company entered into separate Convertible Promissory Notes and Loan Agreements (the “2020 Notes”) in favor of (a) SREP for $7,220, 000 and (b) Efanur S.A. (“Efanur”), an affiliate of RES and IRSA for $2,780,000. Pursuant to the 2020 Notes, the Company borrowed $10,000 from SREP and Efanur and used the proceeds to repay loans outstanding under the credit facility. SREP and Efanur may elect to convert the principal due under the applicable Note into common stock of the Company in connection with any future rights offering commenced by the Company for 4,000,000 shares of common stock of the Company at a price of $2.50 per share (a “Rights Offering”). Pursuant to the Note in favor of SREP, the Company has committed to offer to SREP the option to purchase any shares of common stock of the Company underlying any unexercised rights in any such Rights Offering. In the event that Portfolio Sale is completed the 2020 Notes will be repaid in cash.

RES, SREP, and Mr. Blackham have entered into agreements with the Buyer to, among other things, vote all shares of Company common stock held by them and their affiliates affirmatively for the Portfolio Sale Proposal and against any other action that could reasonably be expected to impede, interfere with, delay, postpone or materially and adversely affect the Portfolio Sale or the other transactions contemplated by the Purchase Agreement or that could reasonably be expected to result in any condition to the Portfolio Sale set forth in the Purchase Agreement not being fulfilled.

These stockholders collectively hold approximately 62.2% of the outstanding shares of common stock. However, upon the occurrence of an adverse recommendation change in compliance with the Purchase Agreement by our board of directors to its recommendation to stockholders of the Portfolio Sale, the aggregate number of shares covered by the voting obligations set forth in these voting agreements will automatically be reduced (on a pro rata basis with each other) to the extent necessary so that the aggregate number of shares of common stock subject to the voting agreements represents no more than 35% of the shares of common stock outstanding and entitled to vote at the special meeting.

Unless there occurs an adverse recommendation change under the Purchase Agreement or the termination of the voting agreements, the aggregate voting power of RES and SREP is sufficient to assure approval of the proposals at the special meeting. See “Voting Agreements” above. The foregoing description of the voting agreement does not purport to be complete and is qualified in its entirety by reference to the form of the voting agreement which is attached as Appendix D to this proxy statement.

The vesting and forfeiture restrictions on shares of our restricted stock granted under our stockholder approved 2016 stock plan (the “2016 Stock Plan”) will not be impacted by the Portfolio Sale, but thereafter upon the involuntary termination of employment of the holder such restrictions will lapse and such shares will be fully vested in the holder thereof.

As of the date of the proxy statement our directors and executive officers hold shares of our restricted stock as follows:

Pursuant to Mr. Blackham’s employment agreement and his 2021 annual incentive plan, a prorated annual cash incentive may be paid to Mr. Blackham of up to $400,000 and pursuant to Ms. Burger’s 2021 annual incentive plan a prorated annual cash incentive may be paid to Ms. Burger of up to $20,000, each prorated as applicable depending on the time of the closing of the Portfolio Sale and as determined by the compensation committee of our board of directors based on their achievement of their annual incentive plans. The compensation committee of our board of directors may approve for Mr. Blackham to receive up to 23,479 shares of Company common stock on a prorated basis with respect to performance bonuses under his employment agreement as determined by the compensation committee of our board of directors for achievement of budgeted funds from operation targets for 2021. Other employees may earn up to an aggregate of $7,450 (prorated as applicable) in annual incentive compensation for 2021.

Change in control payments and benefits for the Company employees, other than Mr. Blackham and Ms. Burger, assuming that the closing of the Portfolio Sale occurs on November 19, 2021, are estimated, before any applicable withholding, to be an aggregate of $119,750 for change in control payments, $12,885 for the premiums for medical insurance continuation coverage for eligible employees electing such coverage and their dependents (as applicable) and $17,612 for estimated accrued, but unpaid vacation. Additionally, prorated incentive compensation for 2021 may be paid to the Company employees. See “Prorated 2021 annual incentive” above.

In connection with the Plan of Liquidation and following the Portfolio Sale, the services for consultants to the Company will be terminated. The termination of such services will entitle the consultants to an aggregate of $236,666 in additional fees.

The information set forth below is intended to comply with Item 402(t) of Regulation S-K regarding specified compensation that is based on or otherwise relates to the Portfolio Sale that is payable or may become payable to each of our named executive officers. This compensation is referred to as “golden parachute” compensation by the applicable SEC disclosure rules. Our named executive officers are J. William Blackham, President and Chief Executive Officer, and Jill Burger, Interim Chief Financial Officer and Chief Accounting Officer.

The table below sets forth an estimate of the approximate values of “golden parachute” compensation that may become payable to our named executive officers in connection with the Portfolio Sale pursuant to

Mr. Blackham’s employment agreement with the Company and other payments upon change of control of the Company as approved by the board of directors and compensation committee of the Company for Mr. Blackham and Ms. Burger. The closing of the Portfolio Sale will be a change of control of the Company for purposes of triggering the payments described below for Mr. Blackham and for Ms. Burger upon subsequent termination of employment. Subject to any delay required by Section 409A of the Code, all such amounts to be paid in cash will be paid promptly in a lump sum, and the shares of Company common stock will be issued in the case of Mr. Blackham. The table assumes (i) that the closing of the Portfolio Sale will occur on November 19, 2021 (the assumed date of the closing of the Portfolio Sale solely for purposes of this golden parachute compensation disclosure), (ii) that a termination of employment is deemed to occur immediately following the closing of the Portfolio Sale (for Mr. Blackham, a termination considered to be “without cause” or by the executive for “good reason”, each as defined under his employment agreement, that occurs in connection with a change in control of the Company), (iii) base salary, target bonus levels and equity award holdings as of November 19, 2021, and (iv) that no amount of withholding taxes are applicable to any payments set forth in the table. As a result of these reasonable assumptions, and the additional assumptions set forth in the footnotes, the actual amounts, if any, that a named executive officer receives may materially differ from the amounts set forth in the below table. The amounts set forth in the table values shares of our common stock at $5.41 per share, the closing price of our common stock on the NYSE American stock exchange on September 22, 2021, the date prior to the announcement by the Company of entering into the Purchase Agreement.

Other than in connection with the filing of this proxy statement with the SEC and any requirements under Maryland law, the Company is not aware of any regulatory or governmental requirements that must be complied with or regulatory or governmental approvals that must be obtained in connection with the Portfolio Sale or the Plan of Liquidation.

Pursuant to Maryland law, stockholders are not entitled to appraisal or dissenters rights (or rights of an objecting stockholder) in connection with the Portfolio Sale or the Plan of Liquidation.

There is currently no litigation arising from our actions in connection with the Portfolio Sale or the Plan of Liquidation.

Upon filing our Articles of Dissolution with the State Department of Assessments & Taxation of the State of Maryland, the Company common stock will cease to be registered under the Exchange Act, and accordingly, the Company will no longer be subject to the periodic reporting and other requirements imposed under the Exchange Act. We currently intend to close our stock transfer books on the dissolution date and at such time cease recording stock transfers.

The following summarizes the material provisions of the Purchase Agreement. This summary does not purport to be complete and may not contain all of the information about the Purchase Agreement that is important to you. The summary of the material terms of the Purchase Agreement below and elsewhere in this proxy statement is qualified in its entirety by reference to the Purchase Agreement, a copy of which is attached to this proxy statement as Appendix A and which we incorporate by reference into this proxy statement. We recommend that you read the Purchase Agreement attached to this proxy statement as Appendix A carefully and in its entirety, as the rights and obligations of the parties are governed by the express terms of the Purchase Agreement and not by this summary or any other information contained in this proxy statement.

The representations, warranties, covenants and agreements described below and included in the Purchase Agreement (1) were made solely for the benefit of the parties to the Purchase Agreement; and (2) may be subject to important qualifications, limitations and supplemental information agreed to by the parties in connection with negotiating the terms of the Purchase Agreement. In addition, the representations and warranties have been included in the Purchase Agreement for the purpose of allocating contractual risk between the parties instead of establishing such matters as facts, and may be subject to standards of materiality applicable to such parties that differ from those applicable to stockholders. Stockholders are not third-party beneficiaries under the Purchase Agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or its subsidiaries. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement, may have changed since the date of the Purchase Agreement. You should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or conditions of the Company or its subsidiaries. The representations, warranties and covenants in the Purchase Agreement and any descriptions thereof should be read in conjunction with the disclosures in our periodic and current reports, proxy statements and other documents filed with the SEC. See the section of this proxy statement entitled “Where You Can Find More Information.”

In addition, you should not rely on the covenants in the Purchase Agreement as actual limitations on the respective businesses of the parties because the parties may take certain actions that are either expressly permitted in the confidential disclosure schedules to the Purchase Agreement or as otherwise consented to by the appropriate party, which consent may be given without prior notice to the public. The disclosure schedules to the Purchase Agreement contain or refer to information that has been included in the Company’s prior public filings with the SEC and may also include other non-public information. The disclosure schedules have not been made public because, among other things, they include confidential or proprietary information. The parties believe, however, that all information material to a stockholder’s decision to approve the Portfolio Sale Proposal is included in or incorporated into this document.

Generally pursuant to the Purchase Agreement, we will sell, or cause to be sold, and Buyer will purchase, all of the equity interests of the Company’s 15 indirectly owned subsidiaries, which each in turn owns one of the 15 hotels in the Portfolio, plus additional assets and other items related to the Portfolio.

More specifically, under the Purchase Agreement, the Company will, and has agreed to cause the “Seller Group” to, sell, convey, transfer and assign and deliver to Buyer, and the Buyer will purchase and accept from the Seller Group in accordance with the terms of the Purchase Agreement:

The “Seller Group” means, individually or collectively, as applicable, the Company, the Company’s operating partnership, Condor Limited Partnership (the “Operating Partnership”), the Company’s operating lessees (the “Seller Operating Lessees”) and, prior to closing, the 15 Operating Partnership’s subsidiaries that each own one of the hotels in the Portfolio (the “Seller’s Subsidiaries”).

The “Interests” mean 100% of the outstanding equity interests in the Seller’s Subsidiaries.

The “Interest Related Property” means, with respect to the Interests, the following: all the Seller Group’s right, title and interest in, to and under the Seller’s Subsidiaries and the relevant Seller’s Subsidiaries organizational documents, including, without limitation, all of the relevant Seller Group’s right, title and interest, in, to and under all:

The Buyer must purchase the Property on an “all or nothing” basis. As such, the Company agrees to sell to Buyer, and Buyer agrees to purchase from the Company, all of the Interests and Property at closing in consideration for the purchase price described in the section below entitled “Purchase Price”.

The Buyer has acknowledged and agreed, except for the Company’s warranties, that the purchase of the Property will be on an “as is”, “where is”, “with all faults” basis, subject to ordinary wear and tear from the date of the Purchase Agreement until closing. The Company, except as expressly stated in the Purchase Agreement, has no obligation to repair any damage to or defect in the Property, replace any of the Property or otherwise remedy any matter affecting the condition of the Property.

The following categories of property, assets, rights and interests will not be transferred, assigned or conveyed to the Buyer at the closing of the Portfolio Sale and will be retained by the Seller Group:

The purchase price for the Property is $305,000,000. The Buyer will pay the price as follows:

Buyer is entitled to certain credits and to deduct and withhold any amounts from the consideration payable to the Company under the Purchase Agreement that are required to be withheld with respect to the making of any such payment under the U.S. Internal Revenue Code, or any provision of state, local or foreign applicable laws.

There will be an apportionment between the Company and Buyer, such that all items of income and expense for the hotels on the closing date will be for the account of Buyer, and the net amount thereof will be paid together with or credited against the Purchase Price payable at closing. Such apportionments are as follows:

All revenues received or to be received on account of room rents for the period prior to and including the Apportionment Date will belong to the Company with Buyer to remit such revenues to the Company to the extent any such revenues are paid to Buyer following closing and all such revenues attributable to the ownership and operation of the hotels for the period beginning on the day immediately following the Apportionment Date will belong to Buyer with the Company to remit such revenues to Buyer to the extent such revenues are paid to the Company following closing.

All revenues received or to be received from transient guests on account of room rents, facilities occupied and the use of the premises (including without limitation parking areas, mini-bar sales, phone and other communication charges and the like) for the period prior to but excluding the Apportionment Date belong to the Company.

Revenues from conferences, receptions, meetings, and other functions occurring in any conference, banquet or meeting rooms in the hotels, including usage charges and related taxes, food and beverage sales, valet parking charges, equipment rentals, and telecommunications charges will be allocated between the Company and Buyer, based on when any such function commenced.

Buyer will acquire (and the Company will receive a credit for) all accounts receivable other than those due and owing from an affiliate of Seller Group which are 30 days or less outstanding; Buyer and the Company will each retain 50% of all accounts receivable which are more than 30 days but less than 90 days outstanding (with the Company receiving an applicable credit therefor); and the Company will retain all accounts receivable which are more than 90 days outstanding.

Any other ordinary and usual adjustments in connection with the sale of the Interests will be allocated between Buyer and the Company in accordance with the customary practice for transactions for the sale of equity interests.

Buyer will receive a credit equal to 100% of all outstanding, unused and unexpired gift cards, gift certificates, coupons or other similar instruments or gift certificates as of closing that entitle the holder or bearer thereof to a credit (whether a specific dollar amount or for a specified service). At closing, the Company will furnish Buyer with a listing or other detailed description of the combined monetary amount of such outstanding gift certificates.

The Company will receive a Purchase Price credit at closing in the amount of $250,000 representing Buyer’s share of costs and expenses due under the CMBS Loan Agreement (as defined below) the cost of acquiring the Defeasance Collateral (as defined in the CMBS Loan Agreement); and other costs and expenses of the Company and the borrowers under the CMBS Loan paid or incurred in connection with the defeasance.

Buyer will receive a credit to the Purchase Price for all accrued and unpaid wages, salaries, accrued or earned bonuses (and associated payroll tax obligations), retirement, health, welfare, accrued vacation and other paid time off, and any other employee benefits, with respect to the employees under the management agreements (other than those excluded management agreements) which are unpaid as of the time of apportionment.

All base, incentive and other management fees and amounts owed or reimbursable to the hotel management companies pursuant to the management agreements (excluding the excluded management agreements but including the new management agreements) that are accrued with respect to the calendar month (or other applicable time period thereunder) in which the closing date occurs and that have not been paid at or prior to closing under each such management agreement will be prorated between the Company and Buyer as of the cut-off time.

Subject to the satisfaction or, to the extent permitted by applicable law, waiver of the conditions to closing set forth in the Purchase Agreement, the closing the of the Portfolio Sale will take place through escrow with a certain escrow agent at 3:00 p.m. local Bethesda, Maryland time on the date that is the later of (i) November 19, 2021 and (ii) the third business day following the date on which the conditions for closing have been satisfied, or on such alternative date or at such alternative location as may be mutually agreed upon by the Company and Buyer in writing.

We have made customary representations and warranties in the Purchase Agreement that are subject, in some cases, to specified exceptions and qualifications contained in the Purchase Agreement or in the disclosure schedules delivered in connection therewith. These representations and warranties relate to, among other things:

The Purchase Agreement also contains customary representations and warranties made by the Buyer that are subject, in some cases, to specified exceptions and qualifications contained in the Purchase Agreement. These representations and warranties relate to, among other things:

Under the Purchase Agreement, we have agreed that, subject to certain exceptions in the Purchase Agreement, between the effective date of the Purchase Agreement and the closing date, subject to and consistent with the terms of the applicable management agreement, and subject to any actions that the Company takes or causes Seller Group take, in connection with COVID-19 or other public health emergencies to protect the health and safety of customers, hotel employees and/or other business relationships solely to the extent required by applicable laws and the requirements of the franchise agreements, without the prior written consent of Buyer, the Company and Seller Group will, and use reasonable efforts to cause the hotel management company:

The Company will cause to be prepared and delivered to Buyer the following documents:

From the effective date of the Purchase Agreement until closing or earlier termination of the Purchase Agreement, the Company must cause its subsidiaries and its and their officers and directors not to, and must not authorize and must use reasonable efforts to cause any of its other representatives not to, directly or indirectly:

The Company has, and has caused each of its subsidiaries to, and has directed the representatives of the Company and its subsidiaries to, immediately cease and terminate all existing discussions and negotiations with any person and its representatives (other than Buyer) conducted with respect to any acquisition proposal, and will not terminate, amend, release or modify any provision of any standstill agreement to which we or any of our affiliates or representatives is a party except to allow the applicable party to make an acquisition proposal to our board of directors on a non-public basis.

Prior to obtaining stockholder approval of the Portfolio Sale Proposal and subject to the Company’s compliance with the provisions described in this section titled “Exclusivity; No Solicitations”:

then we may (i) furnish non-public information with respect to the Company and our subsidiaries to the person making such acquisition proposal pursuant to an acceptable confidentiality agreement and (ii) participate in negotiations with the person making such acquisition proposal regarding such acquisition proposal. Any non-public information provided to any person given such access must have previously been provided to Buyer or will be provided to Buyer as soon as reasonably practicable (and in any event within 48 hours of the time it is provided to such person).

The Company must promptly, within 48 hours, notify Buyer after receipt of any acquisition proposal or any request for non-public information relating to the Company or any of its subsidiaries by any third party that informs us that it is making, or has made, an acquisition proposal, or any inquiry from any person seeking to have discussions or negotiations with the Company relating to a possible acquisition proposal. Such notice will be made orally and confirmed in writing, and will identify the person making such acquisition proposal or inquiry and will indicate the material terms and conditions of any acquisition proposals, inquiries, proposals or offers, to the extent known (including, if applicable, providing copies of any written inquiries, requests, proposals or offers and any proposed agreements related thereto, which may be redacted to the extent necessary to protect confidential information of the business or operations of the person making such acquisition proposals, inquiries, proposals or offers). The Company must also promptly (and in any event within 48 hours), notify Buyer, orally and in writing, (i) if the Company determines to begin providing non-public information or to engage in discussions or negotiations concerning an acquisition proposal and will in no event begin providing such information or engaging in such discussions or negotiations prior to providing such notice and (ii) of any change to the financial and other material terms and conditions of any acquisition proposal and otherwise keep Buyer reasonably informed of the status and terms of any such proposals, offers, discussions or negotiations on a current basis, including by providing to Buyer a copy of all proposals, offers, drafts of proposed agreements or correspondence relating thereto. The Company has agreed that neither it nor any of its subsidiaries will, after the effective date of the Purchase Agreement, enter into any confidentiality or similar agreement that would prohibit it from providing such information to Buyer as descried above.

Except in the circumstances and pursuant to the procedures described below, neither the Board nor any committee thereof will:

We refer to any action in the first three bullets above as an “adverse recommendation change.”

Prior to the stockholder approval of the Portfolio Sale Proposal the Board is permitted to affect an adverse recommendation change: (i) in response to an “intervening event” (as defined in the Purchase Agreement) if the Board determines in good faith, after consultation with its outside legal counsel, that the failure to take such action would violate the Board’s duties under applicable law, and (ii) terminate the Purchase Agreement pursuant to a Superior Proposal Termination (as described below), and concurrently enter into an alternative acquisition agreement, if the Board has received an unsolicited written bona fide acquisition proposal (and the Company has not breached an of the provisions described under this section “—Exclusivity; No Solicitation”) that, in the good faith determination of the Board, after consultation with outside legal counsel and financial advisors, constitutes a superior proposal; provided that the following requirements are met:

Any amendment to the financial terms or any other material amendment of such a superior proposal will require a new notice of change of recommendation, and the Company will be required to comply again with the requirements described above, except that references to the five business day period above will be deemed to be references to a three business day period following receipt by Buyer of any such new notice of change of recommendation.

Subject to the terms of the Purchase Agreement, the Company and the Board may take and disclose to the Company’s stockholders a position contemplated by Rule 14d-9, Rule 14e-2(a)(2) or (3) or Item 1012(a) of Regulation M-A promulgated under the Exchange Act and make any disclosure to the stockholders of Company that constitutes a “stop, look and listen” communication pursuant to Section 14d-9(f) under the Exchange Act (or any similar communications with our stockholders).

As promptly as reasonably practicable after the execution of the Purchase Agreement, the Company was required to prepare and file with the SEC this proxy statement in preliminary form for a special meeting of Company’s stockholders to obtain the approval of the Purchase Agreement from the stockholders. As promptly as practicable following the clearance of this proxy statement by the SEC, the Company must duly call, give notice of, convene and hold, the stockholders meeting for the purpose of obtaining stockholder approval of the Portfolio Sale Proposal.

The Company, through the Board, is required to recommend to our stockholders that they approve the Portfolio Sale Proposal, include such recommendation in this Proxy Statement and solicit and use its reasonable

efforts to obtain our stockholder’s approval of the Portfolio Sale Proposal (including by soliciting proxies from our stockholders), except to the extent that the Board will have made an adverse recommendation change as permitted described above. Unless the Purchase Agreement will have been terminated in accordance with its terms, the obligation of the Company to duly call, give notice of, convene and hold the special meeting, mail this Proxy Statement (and any amendment or supplement thereto that may be required by applicable law) to our stockholders and solicit proxies in favor of the approval of the Portfolio Sale Proposal will not be affected by an adverse recommendation change.

The Company, acting through the Board, is permitted to adjourn, delay or postpone the special meeting in accordance with applicable law after consultation with Buyer in certain circumstances as described in the Purchase Agreement, provided that, without the written consent of Buyer, in no event shall the special meeting (as so adjourned, delayed or postponed) be held on a date that is more than 30 days after the date for which the special meeting was originally scheduled.

Prior to or concurrently with closing, (i) SPPR Holdings, Inc., a Company indirect subsidiary, must transfer it’s 0.1% ownership interest in SPPR-Dowell, a Company indirect subsidiary, and its applicable obligations as manager to the Operating Partnership, such that prior to closing, the Operating Partnership will own 100% of the interests in SPPR-Dowell and (ii) Spring Street Hotel Property II LLC, a Company indirect subsidiary, must transfer 100% of its interest in Spring Street Hotel Property LLC to the Operating Partnership, such that prior to closing, the Operating Partnership will own 100% of the interests in Spring Street Hotel Property LLC.

Except in instances permitted under the Purchase Agreement, the Seller Group will not:

The Company agrees to use our good faith efforts to cause its respective officers, employees and advisors to provide reasonable cooperation with the efforts of Buyer to arrange any debt financings to be obtained at closing by or on behalf of Buyer for the Portfolio Sale, as may be reasonably requested by Buyer upon reasonable advance notice to the Company.

Pursuant to the Purchase Agreement and as further agreed by Buyer and the Company, the Company must terminate the management agreement with Cherry Cove Hospitality Management, LLC, the manager of the Company hotel located at 13100 Dowell Road, Dowell MD 20629.

Up to closing and including closing, the Company must cause the hotel management companies not to in engage in any “mass layoff” or “plant closing” that would trigger any notification requirements under the WARN Act. Additionally, for the 90-day period following the closing, Buyer must cause the hotel management companies not to engage in any “mass layoff” or “plant closing” which would trigger to notification requirements of the WARN Act.

The obligation of the Company to consummate the Portfolio Sale and deliver the documents and instruments required under the Purchase Agreement are subject to the satisfaction in full of a number of conditions on or prior to the closing. Such conditions include, but are not limited to:

The obligation of the Buyer to make payment of the purchase price and to consummate the Portfolio Sale are subject to the satisfaction in full of a number of conditions on or prior to the closing. Such conditions include, but are not limited to:

If Buyer defaults in performing its obligations under the Purchase Agreement to proceed to closing, the Company, as its sole and exclusive remedy for any such default, will be entitled to terminate the Purchase Agreement by giving Buyer written notice to such effect, and receive the $15,000,000 deposited by Buyer in escrow as liquidated damages for Buyer’s default and upon such receipt no party to the Purchase Agreement will thereafter have any further rights or liabilities under the Purchase Agreement (except that the parties will remain obligated with respect to the provisions which specifically survive termination of the Purchase Agreement).

If the Company fails to convey the Property or the Interests to Buyer in accordance with the terms of the Purchase Agreement, or if the Company otherwise fails to perform, in any material respect its obligations as and when required under the Purchase Agreement (subject to a five business day cure period for any interim failure prior to the closing date, or if applicable such lesser period as remains prior to the closing date), then Buyer will have the right to exercise any one of the following as Buyer’s sole and exclusive remedy:

In addition to the other rights and remedies available to Buyer under the Purchase Agreement, if Buyer elects to terminate the Purchase Agreement due to a material breach or default by the Company, the Company

must reimburse Buyer or its designee within five business days following the date of such termination for all of the documented out-of-pocket costs and expenses incurred by or on behalf of Buyer or its affiliates in connection with the Purchase Agreement and the transactions contemplated by the Purchase Agreement (including fees and expenses of the representative of Buyer and/or its affiliates), up to an amount not to exceed $500,000.

There will not be a cure period for the Operating Partnership’s obligation to convey Interests to Buyer in accordance with the terms of the Purchase Agreement on the closing date if Buyer is otherwise ready, willing and able to close the Portfolio Sale but for the Company’s failure.

Subject to certain exceptions described in the Purchase Agreement, the Purchase Agreement may be terminated and the Portfolio Sale may be abandoned at any time prior to closing, notwithstanding the receipt of approval of the Portfolio Sale Proposal from our stockholders:

The Company must pay to Buyer by wire transfer of immediately available funds an amount equal to $5,000,000 if any of the following occur:

The termination fee is not a penalty, but rather is liquidated damages in a reasonable amount that will compensate Buyer in the circumstances in which the termination fee is payable for the efforts and resources expended and opportunities foregone while negotiating the Purchase Agreement and in reliance on the Purchase Agreement and on the expectation or consummation of the Portfolio Sale.

Except as otherwise expressly provided in the Purchase Agreement or related to any claims for indemnification, and except for claims of the Company’s fraud, the respective representations, warranties, obligations, covenants and agreements of the Company and Buyer contained herein will not survive the closing.

The maximum aggregate liability of the Company and its subsidiaries, and the maximum aggregate amount that may be awarded to and collected at any time by Buyer, in connection with the Portfolio Sale, the Property and any liabilities attributable to the Property, under the Purchase Agreement or otherwise in connection with the Property, including in connection with the breach of any covenant of the Company contained in the Purchase Agreement (other than any such covenant that has been waived by Buyer) or of any of the Company’s warranties will not exceed $6,000,000.

No claim by Buyer may be made, and the Company and its subsidiaries will not be liable for any judgment in any action based upon any claim, in connection with the Portfolio Sale, the Property and any liabilities attributable to the Property, under the Purchase Agreement or otherwise in connection with the Property, including in connection with the breach of any covenant of the Company contained in the Purchase Agreement (other than any such covenant that has been waived by Buyer), unless and until such claim, when taken together with all other prior or contemporaneous claims, is for an aggregate amount in excess of $150,000, in which event the Company will be responsible for all such amounts (subject to certain exceptions within the Purchase Agreement).

It is the parties’ intention that Buyer will continue to operate each hotel under the same brand as such hotel is currently operated as of the effective date of the Purchase Agreement, and the Purchase Agreement has been negotiated and entered into based upon that expectation. Buyer promptly after the effective date of the Purchase Agreement will make applications to the applicable franchisor for such franchisor’s approval of the re-issuance of the applicable franchise agreement to Buyer.

The Company will reasonably cooperate with Buyer or Buyer’s designee, at Buyer’s sole cost and expense, in connection with its application for a new liquor license or for the transfer of the existing liquor license, as applicable, for each hotel relating to the sale and on-premises consumption of liquor and other alcoholic beverages to replace the existing liquor licenses.

Promptly following execution of the Purchase Agreement, the Company will undertake and diligently prosecute all actions necessary to arrange for a defeasance of the CMBS Loan pursuant to the CMBS Loan Agreement, on or prior to the closing date. As such, the hotel located at 6750 Southcrest Parkway, Southaven, MS 38671 will be conveyed to Buyer without any encumbrances, including any mortgages, deeds of trust or other security interests, related to the CMBS Loan, and the Company will provide all deliverables and opinions in connection with the defeasance of the CMBS Loan Agreement.

We are asking the holders of our common stock to approve the Portfolio Sale Proposal.

For detailed information regarding the Portfolio Sale Proposal, see the information about the Portfolio Sale and the Purchase Agreement throughout this proxy statement, including the information set forth in the sections entitled “The Portfolio Sale and The Plan of Liquidation” on page 26 and “The Purchase Agreement” on page 54. A copy of the Purchase Agreement is attached as Appendix A to this proxy statement.

Approval of the Portfolio Sale Proposal requires the affirmative vote of a majority of the votes entitled to be cast by the holders of the Company common stock as of the Record Date. If you properly authorize your proxy by mail, by telephone or through the Internet, but do not indicate instructions to vote your common shares “FOR,” “AGAINST” or “ABSTAIN” on the Portfolio Sale Proposal, your shares of Company common stock will be voted in accordance with the recommendation of our board of directors. Each share of Company common stock that was outstanding on the Record Date entitles the holder thereof to one vote on each proposal presented at the special meeting. Because the required vote for the Portfolio Sale Proposal is based on the number of outstanding shares of Company common stock entitled to vote at the special meeting, failure to vote your shares, abstentions, or a failure to provide instructions to your broker, bank, or other nominee with respect to this proposal will have the same effect as voting against approval of the Portfolio Sale Proposal.

Approval of the Portfolio Sale Proposal is a condition to the completion of the Portfolio Sale. In the event this proposal is not approved, the Portfolio Sale cannot be completed.

RES, SREP, and Mr. Blackham have entered into agreements with the Buyer to, among other things, vote all shares of Company common stock held by them and their affiliates affirmatively for the Portfolio Sale Proposal and against any other action that could reasonably be expected to impede, interfere with, delay, postpone or materially and adversely affect the Portfolio Sale or the other transactions contemplated by the Purchase Agreement or that could reasonably be expected to result in any condition to the Portfolio Sale set forth in the Purchase Agreement not being fulfilled. Pursuant to its agreements, RES will provide, or cause to be provided, the consent and approval in satisfaction of the ISRA Approval prior to or at the special meeting.

These stockholders collectively hold approximately 62.2% of the outstanding shares of common stock. However, upon the occurrence of an adverse recommendation change in compliance with the Purchase Agreement by our board of directors to its recommendation to stockholders of the Portfolio Sale, the aggregate number of shares covered by the voting obligations set forth in these voting agreements will automatically be reduced (on a pro rata basis with each other) to the extent necessary so that the aggregate number of shares of common stock subject to the voting agreements represents no more than 35% of the shares of common stock outstanding and entitled to vote at the special meeting.

Unless there occurs an adverse recommendation change under the Purchase Agreement or the termination of the voting agreements, the aggregate voting power of RES and SREP is sufficient to assure approval of the proposals at the special meeting. See “The Portfolio Sale and The Plan of Liquidation—Voting Agreements” on page 48. The foregoing description of the voting agreements does not purport to be complete and is qualified in its entirety by reference to the form of the voting agreement which is attached as Appendix D to this proxy statement.

We are seeking stockholder approval of the Liquidation Proposal at the special meeting. The Plan of Liquidation was approved by the Board on September 20, 2021, subject to stockholder approval. The following summary describes the material provisions of and information related to the Plan of Liquidation. This summary does not purport to be complete and may not contain all of the information about the Plan of Liquidation that is important to you. The Plan of Liquidation is attached hereto at Appendix B and is incorporated by reference in this proxy statement. We encourage you to carefully read the Plan of Liquidation in its entirety for a more complete understanding of the Plan of Liquidation. By approving the Plan of Liquidation, our stockholders will be approving our dissolution under Section 3-403 of the MGCL.

Approval of the Liquidation Proposal requires the affirmative vote of a majority of the votes entitled to be cast by the holders of the Company common stock as of the Record Date. If you properly authorize your proxy by mail, by telephone or through the Internet, but do not indicate instructions to vote your common shares “FOR,” “AGAINST” or “ABSTAIN” on the Liquidation Proposal, your shares of common stock will be voted in accordance with the recommendation of our board of directors. Each share of Company common stock that was outstanding on the Record Date entitles the holder thereof to one vote on each proposal presented at the special meeting. Because the required vote for the Liquidation Proposal is based on the number of outstanding shares of Company common stock entitled to vote at the special meeting, failure to vote your shares, abstentions, and a failure to provide instructions to your broker, bank, or other nominee with respect to this proposal will have the same effect as voting against approval of the Liquidation Proposal.

Pursuant to the Plan of Liquidation and in accordance with the applicable provisions of law, the Company’s officers are authorized:

Under the Plan of Liquidation, the Company Board may modify, amend or abandon the Plan of liquidation, notwithstanding stockholder approval, to the extent permitted by the MGCL. The Company has no present plans or intentions to modify, amend or abandon the Plan of Liquidation.

Stockholder approval of the Liquidation Proposal gives to the Board the power to direct the sale of (or, in certain cases, otherwise dispose of) all of our assets on such terms and in such manner as determined by the Board in its discretion. The prices at which we may be able to sell those assets will depend on factors that in many cases will be beyond our control and may not be as high as the prices that could be obtained if the Company were not in liquidation. Approval of the Liquidation Proposal will constitute approval of all sales or other dispositions of our assets pursuant to the Plan of Liquidation. We will not be required to obtain any further stockholder approval with respect to specific terms of any particular sales or other dispositions of assets approved by the Board.

We currently anticipate making one or more liquidating distributions to our stockholders and expect the final liquidating distribution to be made on or before a date that is within 24 months after stockholder approval of the Liquidation Proposal.

We estimate that if the Plan of Liquidation is approved by our stockholders and we are able to successfully implement the Portfolio Sale and the Plan of Liquidation, then after the sale of all or substantially all of the Company’s assets and the payment of all of the Company’s outstanding liabilities, we will have made total distributions to our stockholders of approximately $7.35 to $7.85 per share of Company common stock. Although we have provided an estimated range of liquidating distributions, we cannot determine at this time when, or potentially whether, we will be able to make any liquidating distributions to our stockholders or the amount of any such distributions. See “Risk Factors—Risks Relating to the Plan of Liquidation” beginning on page 16.

The estimated range of liquidating distributions of $7.35 to $7.85 per share of the Company’s common stock has been determined by us as of September 20, 2021 as follows:

These estimates are based upon market, economic, financial and other circumstances and conditions existing as of the date of this proxy statement, and any changes in such circumstances and conditions during the period under which we implement the Plan of Liquidation could have a material effect on the ultimate amount of proceeds received by stockholders.

The Plan of Liquidation gives the Board the authority, in its discretion, to determine how best to provide for any unknown or contingent liabilities consistent with Maryland law. The Board may authorize us to obtain insurance policies to cover such costs and/or to establish a reserve fund or transfer assets to a liquidating trust out of which to pay such costs. If a reserve fund is established, we would expect a final liquidating distribution to be made once the manager of the fund determines that no further claims are likely to be made upon the fund. Such a determination could be made, for example, upon the expiration of the time periods specified in the statutes of limitations applicable to the type of claims that may be made against the fund. If such a reserve fund is created, the final payout of the fund’s assets remaining after payment of claims against the fund to our stockholders may not occur for three or more years following the filing of our Articles of Dissolution, and may be made through a liquidating trust (as described below under “—Liquidating Trust”).

Although we have provided an estimated range of liquidating distributions, no assurance can be given as to when, or potentially whether, we will be able to make any liquidating distributions to our stockholders or the amount of any such distributions. These determinations depend on a variety of factors, including, but not limited to, whether and when the Portfolio Sale closes, the price and timing of other transactions entered into in the future, the cost of operating the Company through the date of our final dissolution, general business and economic conditions, and other matters. The actual amounts and times of payment of the liquidating distributions will be determined by the Board in its sole discretion. See “Risk Factors—Risks Relating to the Plan of Liquidation.”

We may transfer any remaining assets, including any reserve fund or other cash on hand, and liabilities, to a liquidating trust and distribute interests in the liquidating trust to our stockholders. The creation of a liquidating trust may be necessary to avoid losing our status as a REIT if we fail to complete our Plan of Liquidation within the 24-month period following adoption of the Liquidation Proposal. We may also create a liquidating trust and distribute the interests in the liquidating trust to our stockholders prior to that time in order to avoid the costs of operating as a public company, or if the Board determines that it is otherwise advantageous or appropriate to do so. If we establish a liquidating trust, we would distribute to our stockholders at that time beneficial interests in the liquidating trust in proportion to the number of shares of common stock owned by such holders. The purpose of the liquidating trust that we may establish will be to liquidate any remaining assets on terms satisfactory to the liquidating trustees and, after paying any of our remaining liabilities, distribute the proceeds of the sale of assets formerly owned by us to the holders of the interests in the liquidating trust. The liquidating trust will be obligated to pay any of our expenses and liabilities that remain unsatisfied. Approval of the Liquidation Proposal will constitute the approval by our stockholders of the establishment of a liquidating trust, the Board’s appointment of one or more individuals, who may or may not be former members of the Board or officers, or corporate persons to act as trustee or trustees and the terms of any declaration of trust adopted by the Board. We expect that interests in the liquidating trust will not be freely transferable. Therefore, the recipients of interests in the liquidating trust will not realize any value from these interests unless and until the liquidating trust distributes cash or other assets to them, which will be solely in the discretion of the trustees. There may be certain adverse tax consequences to our stockholders of receiving and owning interests in a liquidating trust as described below under “Material U.S. Federal Income Tax Consequences.”

Any plan to transfer assets to a liquidating trust is only a contingency plan. Therefore, the Board has not determined the detailed terms or structure for a liquidating trust. The characteristics of any liquidating trust will be determined by the Board at a future date depending on factors such as the number and value of assets to be held by the liquidating trust and the number of holders of interests in the liquidating trust.

The Plan of Liquidation authorizes the Board and our officers, when appropriate, to file Articles of Dissolution with the SDAT and to take any other appropriate and necessary action to dissolve the Company under Maryland law.

The Board has unanimously approved the Liquidation Proposal and recommends that you vote “FOR” the approval of the Liquidation Proposal.

Pursuant to Section 14A of the Exchange Act, we are asking holders of our common stock to vote at the special meeting on a non-binding, advisory basis on this Advisory Compensation Proposal regarding the specified compensation that may be paid or become payable to our named executive officers in connection with the Portfolio Sale and the Plan of Liquidation. Information intended to comply with Item 402(t) of Regulation S-K concerning this compensation, subject to certain assumptions described therein, is presented in the section entitled “The Portfolio Sale and the Plan of Liquidation–Interests of certain stockholders, our directors, officers and employees–Golden parachute compensation” beginning on page 51.

The stockholder vote on this Advisory Compensation Proposal is an advisory vote only, and it is not binding on us or our board of directors. Further, the underlying arrangements are contractual in nature and not, by their terms, subject to stockholder approval. Accordingly, regardless of the outcome of the advisory vote, if the Portfolio Sale and/or Plan of Liquidation are implemented, our named executive officers will be eligible to receive the specified compensation that may be paid or become payable to our named executive officers, in accordance with the terms and conditions applicable to such compensation.

We are asking holders of our common stock to vote “FOR” the following resolution:

“RESOLVED, that holders of Company common stock hereby approve, on a non-binding, advisory basis, the specified compensation that may be paid or become payable to the named executive officers of the Company in connection with the Portfolio Sale and the Plan of Liquidation, as disclosed pursuant to Item 402(t) of Regulation S-K under the heading “The Portfolio Sale and the Plan of Liquidation–Interests of certain stockholders, our directors, officers and employees–Golden parachute compensation” beginning on page 51 (which disclosure includes the golden parachute compensation table required pursuant to Item 402(t) of Regulation S-K).”

Adoption of the above resolution, on a non-binding, advisory basis, requires the affirmative vote of a majority of the votes cast by the holders of Company common stock present in person or represented by proxy at the special meeting and entitled to vote. If you properly authorize your proxy by mail, by telephone or through the internet, but do not indicate instructions to vote your common shares “FOR,” “AGAINST” or “ABSTAIN” on this Advisory Compensation Proposal, your shares will be voted in accordance with the recommendation of our board of directors. An abstention or failure to vote on this proposal will have no effect on the approval of this proposal. Broker non-votes are not considered to be votes cast and therefore will have no effect on the approval of this proposal.

If, at the special meeting, the number of shares of our common stock, represented in person or by proxy at the special meeting, voting in favor of the approval of the Portfolio Sale Proposal or the Liquidation Proposal is insufficient to approve the Portfolio Sale Proposal or the Liquidation Proposal, we intend to adjourn the special meeting in order to solicit additional proxies in favor of the Portfolio Sale Proposal and/or the Liquidation Proposal. In that event, we intend to ask our stockholders to vote only upon the Adjournment Proposal.

In this proposal, we are asking you to approve the adjournment of the special meeting, and any later adjournments, in order to enable us to solicit additional proxies in favor of the approval of the Portfolio Sale Proposal and the Liquidation Proposal. If our stockholders approve the Adjournment Proposal, we could adjourn the special meeting to use the additional time to solicit additional proxies in favor of the approval of the Portfolio Sale Proposal and/or Liquidation Proposal, including the solicitation of proxies from Company stockholders that have previously voted against the approval of the Portfolio Sale Proposal and/or the Liquidation Proposal.

The Adjournment Proposal requires the affirmative vote of a majority of the votes cast at the meeting. Any shares not voted (whether by abstention, broker non-vote, or otherwise) have no impact on the vote.

The Board believes that if there are insufficient shares represented in person or by proxy voting in favor of the approval of the Portfolio Sale Proposal and/or the Liquidation Proposal, it is in the best interests of our stockholders to enable us to continue to seek to obtain a sufficient number of additional votes in favor of approval of the Portfolio Sale Proposal and the Liquidation Proposal to bring about the approval of the Portfolio Sale Proposal and the Liquidation Proposal.

The following table sets forth the beneficial ownership of our common stock as of October 13, 2021, by the following persons (a) each stockholder known to us to beneficially own more than 5% of the outstanding shares of our common stock, (b) each director, (c) each executive officer and (d) all directors and executive officers as a group. A person has beneficial ownership over shares if he or she has or shares voting or investment power over the shares, or the right to acquire that power within 60 days of the Record Date.

With respect to our continuing qualification as a real estate investment trust, our charter (the “Articles”) contain an ownership limitation, which prohibits both direct and indirect ownership of more than 9.9% of the outstanding shares of our common stock or 9.9% of any series of our preferred stock. Our Articles permit the board of directors, in its sole discretion, to exempt a person from this ownership limit if the person provides representations and undertakings that enable the board to determine that granting the exemption would not result in the Company losing its qualification as a real estate investment trust (a “REIT”). Under the Internal Revenue Service rules, REIT shares owned by certain entities are considered owned proportionately by owners of the entities for REIT qualification purposes. The holder of securities in excess of the ownership limit in the following table provided representations and undertakings necessary for the board to grant such an exemption.

No appraisal or dissenters’ rights or rights of objecting stockholders are available with respect to the Portfolio Sale or the other transactions contemplated by the Purchase Agreement or the Plan of Liquidation.

We intend to hold an annual meeting of stockholders in 2021 only if the Portfolio Sale is not completed. Any stockholder who intends to present a proposal pursuant to Rule 14a-8 under the Exchange Act of 1934, as amended, at the Company’s 2021 annual meeting of stockholders and who requests inclusion of the proposal in the Company’s 2021 proxy materials is required to submit such proposal to the Company at its principal executive offices (Condor Hospitality Trust, Inc., 1800 W. Pasewalk Avenue, Suite 120, Norfolk, Nebraska, 68701 Attention: Corporate Secretary). Such proposal must have be previously received no later than July 19, 2021, unless the date of the 2021 annual meeting of stockholders is changed by more than 30 days from the date of the previous year’s meeting (December 15, 2020), in which case the proposal must be received at the Company’s principal executive offices a reasonable time before the Company begins to print and send its 2021 proxy materials. In such an event we intend to announce the new deadline in a Form 10-Q or Form 8-K. Any such stockholder proposal must meet the requirements set forth in Rule 14a-8. If such a meeting is held and any stockholder intends to present a proposal to be considered for inclusion in the Company’s proxy materials in connection with the 2021 Annual Meeting, the proposal must be in proper form and must be received by the Company at its office in Bethesda, Maryland, on or before.

The Company’s bylaws set forth certain procedures which stockholders must follow in order to nominate a director or present any other business at an annual stockholders’ meeting. Generally, a stockholder must give timely notice to the Corporate Secretary of the Company. To be timely, such notice must be received by the Company at its principal executive offices not less than ninety days nor more than 120 days prior to the anniversary of the proceeding year’s annual meeting. However, in the event of the date of the annual meeting is advanced more than 30 days, or delayed by more than 60 days, from such anniversary date, notice by the stockholder to be timely must be so delivered and received not earlier than the 120th day prior to such annual meeting and not later than the close of business of the later of the 90th day prior to such annual meeting or the 10th day following the date on which public announcement of date of such meeting is first made. The bylaws specify the information which must accompany such stockholder notice. Details of the provision of the bylaws may be obtained by any stockholder from the Corporate Secretary of the Company.

As of the date of this proxy statement, management knows of no other business to be brought before the special meeting. Pursuant to our bylaws, only the matters set forth in the notice of special meeting may be brought before the virtual special meeting.

We file annual, quarterly and current reports and proxy statements with the SEC. The SEC maintains an internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Our filings are available to the public on the internet website maintained by the SEC at http://www.sec.gov and on our website at http://www.condorhospitality.com under “Investors - SEC Filings.” The information included on our website is not incorporated by reference into this proxy statement.

Any person, including any Company stockholder, to whom this proxy statement is delivered, may request copies of reports, proxy statements or other information concerning us, without charge, by written or telephonic request directed to us at Condor Hospitality Trust, Inc., 11800 W. Pasewalk Avenue, Suite 120, Norfolk, Nebraska, 68701 Attention: Corporate Secretary or telephone: (301) 861-3305. If you would like to request documents, please do so promptly in order to receive them before the special meeting. If you request any documents from us, we will mail them to you by first class mail, or another equally prompt method.

No persons have been authorized to give any information or to make any representations other than those contained in this proxy statement and, if given or made, such information or representations must not be relied upon as having been authorized by us or any other person. This proxy statement is dated October 18, 2021. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date, unless the information specifically indicates that another date applies, and the mailing of this proxy statement to stockholders shall not create any implication to the contrary.